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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBER 1-13018
PETRO STOPPING CENTERS, L.P.
(Exact name of the registrant as specified in its charter)
DELAWARE 74-2628339
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6080 SURETY DR.
EL PASO, TEXAS 79905
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 779-4711
__________________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
__________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT. N/A
Documents incorporated by reference: None
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PETRO STOPPING CENTERS, L.P.
TABLE OF CONTENTS
Item No. Page
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PART I
1. Business 1
2. Properties 7
3. Legal Proceedings 11
4. Submission of Matters to a Vote of Security Holders 11
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 12
6. Selected Financial Data 12
7. Management's Discussion and Analysis 14
8. Financial Statements and Supplementary Data 22
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 42
PART III
10. Directors and Executive Officers of the Registrant 42
11. Executive Compensation 44
12. Security Ownership of Certain Beneficial Owners and
Management 47
13. Certain Relationships and Related Transactions 48
PART IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 54
Signatures 55
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PART I
ITEM 1. BUSINESS
General
Petro Stopping Centers, L.P. (the "Company") is a leading operator of
large, full-service truck stops with a nationwide network of 42 facilities known
as Petro Stopping Centers ("Stopping Centers"), located in 27 states. The
Company has built its reputation by providing a high level of customer service
in a consistently clean and friendly environment. Each Stopping Center offers a
broad range of products, services and amenities, including diesel fuel,
gasoline, home-style restaurants, truck preventive maintenance centers
("Petro:Lubes") and travel and convenience stores to commercial truck drivers,
other highway motorists and local residents. Of the 42 Stopping Centers, 16 are
operated by franchisees who are required to meet the Company's high standards of
quality and service.
The Company's primary customers are commercial and private trucking fleets
and professional truck drivers that comprise the long-haul sector of the
trucking industry. The Company sells diesel fuel to over 9,000 trucking
accounts. By serving the needs of this customer base, the Company has continued
to grow its revenues and generate stable cash flow.
The Company's facilities are designed to offer a number of benefits to
truck fleet operators and drivers. These advantages generally include well-lit
and fenced parking lots to enhance security for drivers, trucks and freight;
spacious parking areas and well-designed traffic flow to reduce truck stop
accidents; fewer stops and out-of-route miles through the use of the Company's
one-stop, multi-service facilities; and improved mileage and engine performance
through the use of the Company's proprietary diesel fuel additive. As trucking
fleets consolidate and outsource their fueling as well as maintenance
requirements, the Company's facilities continue to experience sizable growth in
diesel fuel volume and preventive maintenance revenues.
The Company's business was founded by Jack Cardwell, who opened the
Company's first truck stop in El Paso, Texas in 1975. Until 1992, the Company
conducted its operations through a variety of entities owned by Mr. Cardwell and
members of his family. Effective as of April 30, 1992, Fremont Group, Inc.
("Fremont"), an affiliate of Bechtel Group, Inc. and then named Bechtel
Investments, Inc., made an equity investment in the business through two
Delaware limited partnerships, Petro PSC Properties, L.P. ("Petro Properties")
and Petro PSC, L.P. ("Petro PSC"). In the transaction, Fremont and Roadside,
Inc. ("Roadside"), which is a wholly owned subsidiary of Fremont and was one of
the general partners of Petro Properties and Petro PSC, invested $25,000,000 in
the partnerships and Mr. Cardwell, his son and entities controlled by them, as
well as Arcadian Management Corporation ("Arcadian"), a corporation wholly owned
by a former executive officer of the Company, contributed most of the real
estate assets of the business to Petro Properties and the operating and other
assets of the business to Petro PSC. The contributions made by the members of
the Cardwell Group (as defined) and Arcadian were valued at $45,570,000 by the
partners of Petro Properties. The Cardwell Group's contribution to Petro
Properties was recorded at the Cardwell Group's amortized cost of the related
assets and liabilities. Thereafter, Fremont and Roadside made additional equity
investments in the partnerships totaling $10,000,000. Effective December 31,
1994, Petro Properties and its principal operating subsidiary, Petro PSC, were
merged and the name of the surviving partnership was changed to Petro Stopping
Centers, L.P., a Delaware limited partnership.
In October 1996, Jack Cardwell, Jim Cardwell, JAJCO II, Inc. ("JAJCO"),
Petro Inc. (together with Jack Cardwell, Jim Cardwell, and JAJCO, collectively,
the "Cardwell Group"), Mobil Long Haul Inc. ("Mobil Long Haul"), wholly-owned by
Mobil Oil Corporation ("Mobil"), Petro Holdings GP Corp. ("Holdings GP"), Petro
Holdings LP Corp. ("Holdings LP" and together with Holdings GP, "Chartwell,"
both of which are newly formed affiliates of Chartwell Investments Inc.
("Chartwell Investments")), and the Company, entered into the Omnibus Agreement
pursuant to which the parties thereto agreed, among other matters, that
Chartwell would invest $20.7 million and Mobil Long Haul would invest $15.0
million to acquire the general and limited partnership interests of the Company
owned by Sequoia Ventures, Inc. ("SVI") and Roadside (and together with SVI, the
"Fremont Partners") and to invest in the Company. The investment proceeds were
used to acquire the interests of the Company held by the Fremont Partners for
approximately $25.6 million and to invest approximately $10.1 million in the
Company. In addition, Kirschner Investments, a Company franchisee ("Kirschner")
invested $1.0 million in the Company in connection with the Recapitalization (as
defined) (the "Kirschner Investment").
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The common partnership interests of the Company are owned by Chartwell
(approximately 50.8%), the Cardwell Group (approximately 39.9%), Mobil Long Haul
(approximately 7.4%), and Kirschner (2.0%) and the preferred interests are owned
by Mobil Long Haul ($12.0 million) and the Cardwell Group ($7.6 million).
Chartwell and the Cardwell Group own both general and limited partnership
interests and Mobil Long Haul and Kirschner own only limited partnership
interests. Mobil and the Company also entered into certain supply and marketing
agreements as described herein. See "Certain Relationships and Related
Transactions".
The Company has entered into a strategic alliance with Mobil under which an
affiliate of Mobil has invested in the Company and all of the Company-operated
diesel fuel islands will be branded with the Mobil name and image.
PETRO STOPPING CENTERS
Of the 26 Company-operated Stopping Centers, 23 are full-size locations and
three are "Petro:2" units, which are smaller facilities with fewer amenities
than the full-service locations. Of the 16 franchised facilities, 13 are "full-
service" locations and three are "Petro:2" units. A typical full-size Stopping
Center is built on 15 to 30 acres with separate entrances and parking areas for
trucks and automobiles. Parking areas typically accommodate 200 to 300 trucks
and 100 to 175 cars or recreational vehicles, and are well lit and fenced to
maximize customer safety. Petro Stopping Centers are open 24 hours a day and
typically consist of the following:
Diesel Fuel Island
The diesel fuel island is a self-service facility for professional drivers
which typically consists of 8 to 16 fueling lanes configured in a split crescent
formation. An equal number of fuel dispensers are located on both sides of a
central services building. This layout facilitates highway access and traffic
flow since all trucks approach the fueling lanes from the same direction. The
fuel dispensers are computer driven, high speed units. Each fueling lane permits
simultaneous fueling of each of the truck's two tanks. All diesel fuel sold by
the Company is currently branded "Petro". Pursuant to its strategic alliance
with Mobil, the Company will convert to selling Mobil branded diesel fuel with
the Company's proprietary Petro Power Plus fuel additive at all of the Company-
operated diesel fuel islands. All Company-operated diesel fuel islands and
dispensers will carry signage with both the "Petro" and "Mobil" brand names.
Mobil will bear the costs associated with branding the Company's diesel fuel
islands Mobil.
The central services building provides transaction processing through the
use of integrated, computerized cash registers and an organized data collection
system. Currently, "runners" at each fuel island collect information while
trucks are being fueled. This data, including driver and company names, license
number and mileage, is manually recorded in the computer system before the
driver walks to the cashier to pay for the fuel.
To attract the business of drivers seeking a quick refueling stop, each
central services building includes a "mini-mart" offering an array of deli take
out food, snack foods, beverages, toiletries and a basic selection of trucker
accessories and supplies. In addition, the central services building also
provides other related services including certified scales, check cashing, money
wire services, permit services, faxing and copying. These facilities enable the
driver seeking a quick refueling stop to purchase consumables and services while
refueling.
The diesel fuel islands generated $318.8 million, $351.1 million and $435.1
million in revenue for the fiscal years ended December 30, 1994, December 19,
1995 and December 31, 1996, respectively.
Petro:Lube Express Truck Service Center
In 1983 the Company opened its first Petro:Lube facility to provide "while-
you-wait" preventive maintenance service for trucks. Since that time,
Petro:Lubes have been introduced at all of the Company-operated full-size
Stopping Centers and at two of its three Petro:2 locations. During 1996, the
Company opened its first stand-alone Petro:Lube.
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Petro:Lube facilities offer oil and filter changes, lubrication and new,
used and retread tires, as well as tire repair. All Petro:Lube operations
feature highly recognized quality brands. The Company was the first truck stop
chain to offer service to truckers on an express basis.
Petro:Lube facilities generally are located in a separate building toward
the rear of a Stopping Center and typically consist of four through-bay
entrances, with two in-ground pits. Two to four employees typically work at the
Petro:Lube operations at any particular time.
Each Petro:Lube sells a limited number of high-quality brands such as Mobil
Delvac, Shell Rotella and Chevron Delo heavy duty motor oils and Kelly,
Bridgestone and Firestone tires. Under the marketing agreements entered into
with Mobil, Petro:Lube locations will feature Mobil's Delvac brand lubricants
and will develop marketing programs and strategies with Mobil. Each Petro:Lube
honors manufacturers' warranties as well as the Company's warranties for work
performed at any Petro:Lube throughout the country.
Petro:Lube services are primarily utilized by owner/operators and small
fleets, but larger fleets are increasingly looking to out source their
maintenance needs. In addition to Stopping Center locations, the Company opened
a stand-alone Petro:Lube in 1996. Petro:Lube management believes that a
significant opportunity exists to develop stand-alone Petro:Lube units at
strategic locations throughout the country.
The Petro:Lubes generated $34.2 million, $36.2 million, and $44.1 million in
revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.
Iron Skillet Restaurants
Each full-size Stopping Center includes the Company's trademarked "Iron
Skillet" restaurant. This home-style, sit down restaurant typically seats
approximately 180 customers, and features counter and waitress service, a soup
and salad bar and three "All-You-Can-Eat" buffets per day. The Iron Skillet
prides itself on the "home cooked" items prepared fresh at each location.
Recipes developed at the Company's test kitchen in El Paso are accessible from
each location by computer.
Iron Skillet restaurants are open 24 hours per day, 365 days per year and
feature certain tables and counter seats which are specially reserved for
professional drivers. Public telephones are generally available throughout the
dining area for customer convenience.
The Iron Skillets generated $43.9 million, $47.4 million and $47.3 million
in revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.
Travel and Convenience Stores
Each Stopping Center includes a travel store featuring merchandise
specifically selected to cater to a professional truck driver's shopping needs
during the long periods typically spent away from home. Merchandise categories
include clothing, electronics such as televisions, mobile satellite dishes,
VCR's and CB radios as well as toiletries, gifts and truck accessories such as
cables, fuses, reflectors and antennae. The travel stores also carry a wide
array of Company branded merchandise such as coffee mugs, travel bags, hats, T-
shirts and other items designed to further increase recognition of the Petro
brand. A travel store typically carries approximately 4,500 SKUs and averages
2,400 square feet of selling space.
Gasoline and automobile diesel fuel are sold from a separate Auto Fuel
Island at 25 of the Company's 26 locations. The Auto Fuel Islands are located
near the travel store (or in eight instances near a freestanding convenience
store) and accessed by separate "auto-only" entrances which help to separate
auto and truck traffic at the facility. The typical Auto Fuel Island is equipped
with 4 to 12 fuel dispensers for convenient and efficient fueling. The typical
stand-alone convenience store averages 570 square feet of selling space and
carries snacks, basic groceries and automobile supplies such as motor oil.
The Travel Stores generated $54.7 million, $61.6 million and $67.1 million
in revenue for the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996 respectively.
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Additional Services for Drivers
To meet the personal and business needs of commercial drivers and other
motorists, the Company provides numerous additional services at its Stopping
Centers. At the typical Stopping Center, customers have access to telephone, fax
and other communications services, overnight express drop boxes and ATMs.
Professional drivers have convenient on-site access to a certified truck
weighing scale and a truck wash operated by a third-party at most locations. In
addition, they can receive their paychecks and cash advances from the diesel
fuel island cashier's building. For a driver's comfort and relaxation, Stopping
Centers provide laundry facilities, game rooms, television viewing rooms and at
certain Stopping Centers, movie theaters. These common areas are designed to
provide hospitable areas separate from the restaurant and other retail spaces.
The Company introduced nationally branded fast food concepts at several of
its locations in 1995. The Company currently operates one Wendy's, one Blimpie
Subs & Salads and two Pizza Hut Express units and plans to expand its fast food
program during the next several years.
Each full-size Stopping Center features 12 to 18 private shower facilities.
The showers are fully tiled for easy maintenance and are professionally cleaned
after each use. Each shower room is equipped with a lock to provide privacy and
security. The Company also leases retail space at its Stopping Centers to
independent merchants who sell jewelry and other items and who also provide
haircutting, shoe shine and other services.
Since June 1993, the Stopping Centers located in Hammond and Shreveport,
Louisiana have featured video poker operations. The primary customers for these
activities are local area residents. The video poker operations at each of these
sites feature 50 machines and are conducted in a stand-alone building, separated
from other Stopping Center facilities. A third-party operator manages the video
poker operations and incurs substantially all related expenses while paying a
portion of each machine's "winnings" to the Company. During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish is in which the operations were conducted voted to allow the continued
operations of video poker machines. On November 5, 1996, the parish in which the
Shreveport facility is located voted to continue to allow video poker
operations, while the parish in which the Hammond facility is located voted to
disallow video poker operations. The video poker operations at the Hammond
facility are required to be phased out by the end of June 1999.
PETRO:2 CENTERS
Three Company-operated and three franchised facilities are Petro:2 Centers
("Petro:2") which provide the same basic fueling, restaurant, truck preventive
maintenance and retail store services as full-sized Stopping Centers, but on a
smaller scale and with fewer amenities. Unlike a full-size Stopping Center, a
Petro:2 has a relatively small single building which supports the cashier
functions for both the diesel and gasoline fuel islands. The original Petro:2
design and concept included a restaurant, known as the "Quick! Skillet,"
offering a narrower menu selection than the Iron Skillet restaurant at full-
facility Stopping Centers. Two of the Company-operated Petro:2 Centers currently
contain a "Quick! Skillet" and one now contains a Blimpie Subs & Salads. The
retail store at a Petro:2 is more comparable to a large convenience store with
some merchandise specifically targeted for truckers.
COMPETITION
The U.S. truck stop industry is large and highly fragmented. According to
industry data, which is limited, there are approximately 2,200 truck stops
located on interstate highways. Management believes that approximately 27% are
operated by eight major national or regional truck stop chains. Long-haul trucks
can obtain diesel fuel from a wide variety of sources, including their own
fueling terminals, chains of large, high-quality truck stops, limited service
fueling facilities and some large service stations. The Company believes that,
while it competes with all truck stops, its principal competitors are
increasingly large, multi-service truck stop chains. Management believes that
eight chains accounted for approximately 40% of the 12.5 billion gallons of
over-the-road diesel fuel sold in 1994 in the United States and that the market
share of these large chains continues to increase as fleets look to do business
with fewer, more nationally represented providers to meet their needs. Trucking
fleets typically place a limited number of truck stop chains in their approved
fuel networks in an attempt to consolidate and leverage purchasing power.
Certain of the Company's competitors have substantially greater financial and
marketing resources than the Company.
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The Company prices its diesel fuel competitively. A number of other large,
multi-service truck stop chains build somewhat smaller and less expensive
facilities, emphasizing low-priced diesel fuel and fast food restaurants. Many
of the other truck stop chains employ discount pricing of diesel fuel to
compete. At the same time, increased competition and over capacity among
trucking companies in recent years have increased truck fleet owners' focus on
reducing their operating costs. This has put increased pressure on diesel fuel
margins for the Company and its competitors. In recent years, a number of the
larger fleets have also opened proprietary terminals along their most-traveled
routes. In addition, from time to time, the Company is subject to intense price
competition in certain of its markets.
SUPPLY
The Company purchases diesel fuel for each of its Company-operated Stopping
Centers on a daily basis. The purchase decision is made centrally in El Paso
each morning, based on the information reported by each of the Stopping Centers'
diesel fuel managers. The Company's fuel purchaser receives daily price quotes
from suppliers in each of the Company's markets through an on-line computer
system. The El Paso office then provides site managers with purchasing
instructions. Each location typically maintains a one to three day inventory of
fuel. The Company purchases diesel fuel from various integrated oil companies,
independent oil refineries and petroleum product brokers. Fuel for any single
Stopping Center is typically purchased from two to five established supply
sources.
During 1996, the Company purchased diesel fuel from 10 key suppliers and
over 30 other suppliers. No single supplier accounted for more than
approximately 10% of the total amount of diesel purchased.
Historically, the Company has not entered into significant long-term
contracts with fuel suppliers and engaged in only limited hedging activities. On
occasion the Company has purchased fuel in the forward contract market. In
connection with the Recapitalization (as defined), the Company has entered into
10-year supply agreements with Mobil under which Mobil will supply the Company-
operated Stopping Centers' diesel fuel requirements as well as a portion of
their lubricant and gasoline requirements. The diesel fuel sold at all Company-
operated Stopping Centers will be branded Mobil, and the Company-operated
Petro:Lubes will feature Mobil Delvac lubricants. Under the diesel fuel and
gasoline supply agreement, the Company has agreed to purchase from Mobil
specified distribution terminals a minimum number of gallons of diesel fuel and
gasoline on a monthly basis and on an annual basis, subject to product
availability and reductions by Mobil under certain described circumstances and
subject to existing gasoline supply contractual obligations. The supply
agreement allows the Company to continue to negotiate for the purchase of diesel
fuel with third-party suppliers approved by Mobil. If the Company is able to
obtain a lower diesel fuel price from a third-party supplier in a particular
market area, the Company may request that Mobil meet such lower price or allow a
portion of the Company's diesel fuel requirements to be supplied from such Mobil
approved third-party supplier, in which case Mobil would purchase the diesel
fuel from the supplier and resell the product to the Company. Any change in
supply source, however, does not affect the Company's requirement to purchase
the annual minimum number of gallons from Mobil specified distribution terminals
fixed by the supply agreement. The supply agreement also places a monthly limit
on the maximum number of gallons of diesel fuel and gasoline that the Company
may lift from Mobil specified distribution terminals.
TRADEMARKS AND TRADE NAMES
The Company is the owner in the United States of various trademarks and
service marks. The Company grants franchisees the non-exclusive right to use the
proprietary marks at franchised locations. The Company regards its trademarks
and service marks as valuable assets and believes that they have significant
value in the marketing of its products and services.
GOVERNMENTAL REGULATION
Environmental Regulation
The Company's operations and property are subject to extensive federal and
state legislation and regulations relating to environmental matters. The Company
uses underground and above ground storage tanks to store petroleum products and
waste oils. Statutory and regulatory requirements for underground storage tank
("UST") systems include requirements for tank construction, integrity testing,
leak detection and monitoring, overfill and spill control, and mandate
corrective action in case of a release from an UST into the environment. The
Company is also subject to regulations in certain locations relating to vapor
recovery and discharges into
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water. Management believes that all of its USTs are currently in compliance with
applicable requirements and that it is currently in compliance with all other
applicable environmental laws and regulations. Some existing laws and
regulations relating to USTs do not become applicable immediately and have
future compliance schedules. The Company is currently in the process of
installing cathodic protection and overfill equipment or devices on its older
USTs (those installed before 1988) and plans to complete that work on or before
the dates required to achieve compliance under the current regulations. The
Company plans to spend approximately $300,000 in 1997 in connection with this
work. If additional requirements are imposed, additional expenditures may be
required. During 1994, 1995 and 1996, the Company's expenditures for
environmental matters were $151,000, $261,000 and $180,000, respectively. See
Note 2 to the Company's Consolidated Financial Statements for the year ended
December 31, 1996 for a discussion of its accounting policies relating to
environmental matters.
In connection with its ownership of the properties and operation of its
business, the Company may also be subject to liability under various federal,
state and local environmental laws, ordinances and regulations relating to
cleanup and removal of hazardous substances (which may include petroleum or
petroleum products) on, under or in such property. Certain laws typically impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. Persons who arrange, or are
deemed to have arranged, for the disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of such
substances at the disposal or treatment site, regardless of whether such site is
owned or operated by such person. The Company is not involved in any litigation
or other proceedings seeking to impose such liability. Where required or
believed by the Company to be warranted, the Company takes action at Company-
operated locations to correct the effects on the environment of prior disposal
practices or releases of chemical or petroleum substances by the Company or
other parties. In light of the business of the Company and the quantity of
petroleum products that it handles, there can be no assurance that hazardous
substance contamination does not exist or that material liability will not be
imposed in the future.
Other Regulation
The Company is also subject to local licensing ordinances. The issuance of
permits for service station and lubrication operations is generally a matter of
discretion and is subject to the underlying requirement that the granting of the
permit be consistent with health, safety and moral welfare of the community.
Although the Company believes that careful planning and site selection reduces
the likelihood of significant zoning opposition, significant opposition to the
construction of a Stopping Center, if encountered, may cause the Company to
incur substantial expenses and delay.
The Company's restaurant operations are subject to federal, state and local
regulations concerning health standards, sanitation, fire and general safety,
noncompliance with which could result in temporary or permanent curtailment or
termination of a restaurant's operations. In addition, difficulties in obtaining
the required licensing or approvals could result in delays or cancellations in
the openings of new restaurant facilities.
In addition, the Company's video poker operations are subject to oversight
at the state and local level. During 1996, Louisiana enacted a statute requiring
the cessation of video poker operations unless the parish in which the
operations were conducted voted to allow the continued operations of video poker
machines. On November 5, 1996, the parish in which the Shreveport facility is
located voted to continue to allow video poker operations, while the parish in
which the Hammond facility is located voted to disallow video poker operations.
The phase out period for video poker at the Hammond facility is through June
1999.
The Company as a franchisor is also subject to federal and state regulation
in the states in which it offers franchises or where franchised Stopping Centers
are currently operating. Federal regulations require that the Company provide
each perspective franchisee with a disclosure document that provides information
regarding the Company and the relevant provisions of the franchise agreement and
other ancillary contracts. In addition, certain state regulations require that
the franchisor be registered or be exempt from the applicable registration
requirements. Federal and state franchising laws prohibit certain "deceptive
trade practices" and, in some cases, impose fairness and "anti-discrimination"
standards on the Company.
In addition to the franchise regulations outlined immediately above, the
Company's operations are subject to the Petroleum Marketing Practices Act
("PMPA"). PMPA is a federal law that prohibits a franchisor engaged in the sale,
consignment or distribution of refiner-branded motor fuels from terminating or
failing to renew a "franchise" or "franchise relationship," except on specified
grounds and only after compliance with the
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statute's notification provisions. PMPA expressly preempts state law concerning
the termination, nonrenewal and notice thereof with respect to motor fuel
franchises. PMPA is enforced judicially through cases interpreting the statute.
The Company, currently a franchisee under the PMPA, will also become a
franchisor under the PMPA because it is able to distribute and sell diesel fuel
and gasoline under Mobil's trademarks to its franchisees. Thus, the Company
will become subject, as a franchisor, to PMPA's termination, nonrenewal and
notice requirements in each of its individual, motor fuel contracts with its
franchisees. At the same time, the Company will be entitled to PMPA's
protections in its branded supply agreements with Mobil, as well as other
branded suppliers. The Company is not party to any PMPA litigation.
Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While the Company believes its facilities
are in compliance with these requirements, a determination that the Company is
not in compliance with the ADA could result in the imposition of fines or an
award of damages, which could adversely affect the Company.
The Company believes that all of its Stopping Centers are in compliance with
existing laws and regulations. However, new laws and regulations could require
the Company to incur significant additional costs.
EMPLOYEES
At December 31, 1996, the Company had a total of 3,529 employees, of which
3,336 were full-time and 193 were part time. At that date, 500 of the Company's
employees were salaried and performed executive, management or administrative
functions and the remaining 3,029 employees were hourly employees. Almost 95%
of the Company's employees worked at the Stopping Centers and most employees at
the Stopping Centers work on an hourly basis.
The Company has never had a work stoppage and none of its employees is
represented by a labor organization. The Company believes that it provides
working conditions, wages and benefits that are competitive with other providers
of the kinds of products and services offered by the Company.
Certain sections of this Form 10-K, including "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contain various forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934 which represent the Company's expectations
or beliefs concerning future events that involve risks and uncertainties. All
statements other than statements of historical facts included in this Form 10-K
may be considered forward-looking statements. The Company cautions that these
statements are further qualified by important factors that could cause actual
results to differ materially from factors that cause actual results to differ
materially from those in the forward-looking statements. The Company in the
preparation of its financial statements also makes various estimates and
assumptions that are forward-looking statements.
ITEM 2. PROPERTIES
The Company's corporate headquarters is located in a three-story building in
El Paso, Texas which contains approximately 30,000 square feet of space. The
Company leases the entire building from a member of the Cardwell Group and in
turn subleases approximately 2,700 square feet of space to an unrelated tenant.
The Company's lease of the building expires in December 2005 and provides for
annual rental payments of $336,000, plus taxes, maintenance and operating
expenses. See "Certain Relationships and Related Transactions."
The Company owns 23 of its 26 Stopping Centers in their entirety, owns all
but four acres of its West Memphis Stopping Center site, owns the facility and
leases the land at its Hammond, Louisiana site and leases its Effingham,
Illinois Stopping Center site in its entirety.
The Company also owns sites in Jonesboro, Georgia, Green River, Wyoming and
Beaverdam, Ohio which are suitable for the construction of new Stopping Centers.
The Company also has options, which expire in December 2006, to purchase vacant
land owned by the Cardwell Group that is located adjacent to four of the
existing Stopping Centers: Shreveport, Louisiana (7 acres subject to option);
Weatherford, Texas (34 acres); Beaumont, Texas (17 acres); and Oklahoma City,
Oklahoma (30 acres). See "Certain Relationships and Related Transactions."
7
<PAGE>
The Stopping Center located in Effingham, Illinois is leased from an entity
owned by current and former employees of the Company. The lease expires in May
2006 and provides for adjustable rental payments tied to interest rates (the
"Basic Rent"), which currently are approximately $89,000 per month, plus taxes
and operating expenses. The Company has three consecutive options to renew this
lease for terms of five years each at rental rates equal to the Basic Rent, plus
certain adjustments at the time of renewal and a right of first refusal to
purchase the Stopping Center complex at a purchase price agreed upon between the
lessor and a third party. See "Certain Relationships and Related Transactions."
The land at the Hammond, Louisiana and a small portion (approximately
four acres) of the West Memphis, Arkansas Stopping Centers are subject to ground
leases. The Hammond ground lease expires in September 1998 and provides for
annual rental payments of $109,000, plus taxes. The Company has an option to
renew the ground lease for an additional six years at the current annual rent
increased by the percentage increase in the consumer price index from the
commencement date of the lease to the commencement of the first option, provided
that such increase shall not exceed 10%. The Company has the option, which
expires at the end of the lease term, to purchase the entire 21 acre tract of
land for $4.53 per square foot. If the Company elects to purchase less than all
of the property, the price shall be at a price to be determined according to a
formula specified in the lease. The Company's ground lease at the West Memphis
site expires in April 2005, and the Company has two additional options to renew
the ground lease for 10 years each, with scheduled rent increases every five
years, and a right of first refusal to purchase the land at a purchase price
agreed upon between the Company and the third party. Under the lease, the
Company makes annual rental payments of approximately, $40,000 plus taxes.
8
<PAGE>
The following table outlines the Company-operated Stopping Centers:
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
----------- SIZE OF -----------
STOPPING TOTAL DISPENSERS MAIN TRUCK AUTO
DATE CENTER ACREAGE AT -------------- BUILDING PARKING PARKING
LOCATION OPENED ACREAGE LOCATION DIESEL GAS (SQ. FT.) SPACES SPACES
-------- ---------- -------- ---------- ------ ------ --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMPANY-OPERATED
FULL-SIZED
El Paso, Texas................ Apr. 1975 31 51 12 8 20,000 350 96
Weatherford, Texas............ Sept. 1977 25 25 12 10 21,000 300 128
Beaumont, Texas............... May 1981 20 20 12 8 12,300 275 196
San Antonio, Texas............ Sept. 1982 21 21 12 10 13,200 250 85
Eloy/Casa Grande, Arizona..... June 1984 23 36 12 12 12,300 200 99
Corning, California........... May 1985 18 18 12 12 12,300 120 138
Amarillo, Texas............... June 1985 20 32 12 12 13,800 276 134
Shreveport, Louisiana......... Nov. 1985 18 21 12 12 13,800 242 118
Hammond, Louisiana (a)........ Jan. 1986 16 21 12 12 12,300 200 120
West Memphis, Arkansas(a)..... Aug. 1986 24 63 12 12 13,800 280 172
Milan, New Mexico............. Nov. 1986 23 30 12 12 13,800 200 127
Knoxville, Tennessee.......... Mar. 1987 25 25 12 12 13,800 200 160
Kingman, Arizona.............. Dec. 1987 38 67 12 8 14,600 180 175
Oklahoma City, Oklahoma....... May 1988 30 30 12 8 14,600 200 187
Perrysburg/Toledo, Ohio....... Aug. 1988 33 74 12 8 20,000 375 215
Kingdom City, Missouri........ Feb. 1989 25 35 12 8 20,500 235 195
Bucksville, Alabama........... Feb. 1990 48 51 12 8 14,400 252 167
Girard/Youngstown, Ohio....... May 1990 29 98 14 8 20,000 312 170
Effingham, Illinois(a)........ Mar. 1991 30 30 14 8 20,000 300 138
Atlanta, Georgia.............. Mar. 1992 64 69 16 No Gas 21,500 490 129
Laramie, Wyoming.............. Oct. 1993 35 50 12 6 15,500 180 111
Ocala, Florida................ Jun. 1995 37 170 12 8 20,500 230 230
Medford, Oregon............... Jan. 1995 15 15 8 8 11,500 95 110
PETRO:2
Vinton, Texas................. Jan. 1991 8 19 7 8 4,800 55 8
Kingston Springs, Tennessee... Sept. 1991 9 12 8 8 6,900 85 42
Shorter, Alabama.............. Sept. 1991 9 9 4 4 12,700 75 39
</TABLE>
- ----------
(a) As discussed above, the Effingham, Illinois facility is owned by one present
and five former Company employees and leased to the Company, and the Hammond,
Louisiana and four acres of West Memphis, Arkansas units are subject to ground
leases.
9
<PAGE>
FRANCHISES
Since 1985, the Company has franchised others to operate Stopping Centers in
particular markets. The following table sets forth information on the Company's
15 franchising arrangements as of February 29, 1996:
<TABLE>
<CAPTION>
DATE CENTER EXPIRATION OF
LOCATION OPENED FRANCHISE (1)
-------- ------ -------------
<S> <C> <C>
FULL-SIZED STOPPING CENTER
Elkton, Maryland Sept. 1985 June 1997
Ft. Chiswell, Virginia Mar. 1986 June 1997
Portage, Wisconsin Sept. 1986 Dec. 2001
Joplin, Missouri Oct. 1987 Oct. 1997
Lake Station, Indiana Oct. 1987 Oct. 1997
Ruther Glen, Virginia Mar. 1988 Mar. 1998
New Paris, Ohio Oct. 1989 Oct. 1999
Florence, South Carolina Feb. 1991 Feb. 2001
Rochelle, Illinois Apr. 1992 Apr. 2002
Fargo, North Dakota Nov. 1994 Nov. 2004
Carnesville, Georgia Jan. 1995 Jan. 2005
Bordentown, New Jersey(2) May 1989 Dec. 2005
York, Nebraska Dec. 1996 Dec. 2006
Scranton, Pennsylvania June 1997 (3) June 2007 (4)
PETRO:2
Benton Harbor, Michigan July 1989 July 1999
Salina, Kansas Feb. 1990 Feb. 2000
Jerome, Twin Falls, Idaho Dec. 1990 Dec. 2000
- ---------
</TABLE>
(1) All franchise agreements with the exception of one are for an initial ten
year term and are automatically renewed for two five-year terms subject to
the satisfaction of certain conditions, unless the franchisee gives a
termination notice at least 12 months prior to expirations. The franchise
agreement for the Portage, Wisconsin location has been amended so that its
initial term is approximately 15 years (expiring on December1, 2001) and it
provides for only one five year renewal. All franchise agreements are in
their initial term including the Elkton and Ft. Chiswell agreements, whose
initial terms have been extended from their initial termination dates of
September 1995 and March 1996, respectively, until June 1997 by letter
agreements. The Company is currently in the process of attempting to
obtain a first renewal of such agreements.
(2) Bordentown, New Jersey was a licensee from the date of opening to December
1995, at which time it became a franchised location.
(3) Estimated completion date of Stopping Center.
(4) Estimated termination date. Initial term of Franchise Agreement will
expire 10 years from the date the Stopping Center opens.
One franchisee operates four locations, one operates three locations,
another operates two and six operate one location each. All of the franchisees
are unaffiliated with the Company, except Highway Service Ventures Inc., (See
Item 13 "Certain Relationships and Related Transactions"), which operates the
Elkton, Maryland, Ruther Glen, Virginia, Florence, South Carolina and
Carnesville, Georgia locations, and Bordentown, New Jersey of which Mr. Cardwell
Sr. was a partner until May 1995.
Each existing franchise agreement grants to the franchisee the right and
license to operate a Stopping Center in a specified territory. The franchise
agreements require that the franchisee build, at its own expense, and operate
the Stopping Center in accordance with certain requirements, standards and
specifications prescribed by the Company, including site approval and that the
franchisee purchase certain products from suppliers approved by the Company.
The Company, in turn, is obligated to provide the franchisee with, among other
things, advisory assistance in the operation of the franchised Stopping Center
and assistance in connection with advertising and promotional programs.
10
<PAGE>
The agreements require the franchisee to pay the Company (subject to certain
exceptions), in addition to certain initial fees and training fees, a monthly
royalty fee equal to between 3.5% and 4.0% of non-fuel gross sales (as defined
in the franchise agreement) and between $.0035 and $.0040 per gallon of fuel
sales (as defined); and a monthly advertising fee (administered through an
advertising fund for national and regional advertising) not to exceed 1/4 of 1%
of all gross sales of the franchised location for the preceding month. During
1996, the Company's revenues from its franchisees totaled $3,397,000. In
addition, franchisees contributed $292,000 to advertising programs sponsored by
the Company.
While a majority of diesel purchases at Stopping Centers are paid for by
third-party billing companies, a portion of diesel fuel purchases are paid for
through direct billing arrangements with particular trucking companies. As
provided in the franchise agreements, the Company purchases all of the
receivables generated by the franchisees from customers using direct billing
arrangements. These purchases are on a non-recourse basis to the franchisee.
The Company pays the franchisees 96% of the face amount of the receivable,
retaining 4% to administer the program. However, in cases where the customer is
given a volume discount or priced at "cost plus", the Company retains 1.6% and
.55%, respectively, for administration.
In addition, upon termination or expiration of the franchise agreement in
the event that the franchisee wishes to accept an offer from a third party to
purchase its facility, each franchise agreement grants the Company a right of
first refusal to purchase the facility, at the price offered by the third party.
Similarly, in nine cases, the Company has the right to purchase the franchise
for fair market value, as determined by the parties or an independent appraiser,
upon termination or expiration of the franchise agreement. Each franchise
agreement also contains a three-year covenant by the franchisee not to compete
with the Company at any other location in the area upon termination or
expiration of the franchise agreement.
ITEM 3. LEGAL PROCEEDINGS
The Company is from time to time involved in routine litigation incident to
its operations. The Company believes that the litigation currently pending or
threatened against it will not have a material adverse effect on its
consolidated financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
11
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
All of the Company's general and limited partnership interests are owned by
the Cardwell Group, Chartwell, Mobil Long Haul and Kirschner. See Note 17 to
the Company's Consolidated Financial Statements included elsewhere herein.
Consequently, there is no established trading market for the Company's equity.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data as of and for the years ended
December 31, 1996, December 29, 1995, December 30, 1994 and December 31, 1993
have been derived from the audited financial statements of the Company. The
selected consolidated balance sheet data as of December 31, 1992 have been
derived from the Company's audited balance sheet. The selected consolidated
statement of operations data for the twelve months ended December 31, 1992 have
been prepared by combining the unaudited results for the four month period ended
April 30, 1992 with the audited income statement for the eight month period
ended December 31, 1992. The unaudited financial data presented include, in the
opinion of management, all necessary adjustments required for fair presentation
of such data. In 1994, the Company adopted a 52/53 week fiscal year, which ended
on the Friday closest to December 31. Beginning in 1996, the Company adopted a
calendar year fiscal year, which ends on December 31.
<TABLE>
<CAPTION>
Twelve
Months Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 30, December 29, December 31,
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
dollars in thousands
--------------------
Income Statement Data:
Net revenues:
<S> <C> <C> <C> <C> <C>
Diesel Fuel............................ $282,781 $304,266 $318,761 $351,136 $435,071
Restaurant............................. 40,711 41,819 43,877 47,387 47,335
Petro:Lube............................. 29,696 30,754 34,160 36,198 44,082
Travel and Convenience Stores.......... 48,529 50,556 54,733 61,590 67,104
Petro:2................................ 23,145 26,304 26,798 27,734 33,584
Other.................................. 7,881 8,904 9,564 8,970 9,881
-------- -------- -------- -------- --------
Total................................ 432,743 462,603 487,893 533,015 637,057
Costs and expenses:
Cost of sales.......................... 333,673 353,761 373,436 411,893 511,431
Operating expenses..................... 64,007 66,706 64,968 73,052 81,522
General and administrative............. 11,241 12,933 11,448 12,053 13,925
Employee severance,
benefit and placement expenses........ -- -- -- 2,534
Depreciation and amortization (1)...... 6,848 7,819 8,851 11,144 12,204
-------- -------- -------- -------- --------
Total costs.......................... 415,769 441,219 458,703 508,142 621,616
-------- -------- -------- -------- --------
Operating income..................... 16,974 21,384 29,190 24,873 15,441
Recapitalization costs................... 2,938
Interest expense......................... 18,845 15,515 18,711 21,098 21,263
-------- -------- -------- -------- --------
Income (loss) before
extraordinary item.................... (1,871) 5,869 10,479 3,775 (8,760)
Extraordinary item (2)................... - - 5,250 - -
Minority interest........................ - 52 191 - -
-------- -------- -------- -------- --------
Net income (loss) (3).................... $ (1,871) $ 5,817 $ 5,038 $ 3,775 $ (8,760)
======== ======== ======== ======== ========
OTHER DATA:
- -----------
EBITDA(4)(5)............................. $ 23,822 $ 29,203 $ 38,041 $ 36,017 $ 32,108
Capital expenditures (6)................. 6,750 10,665 8,428 19,508 5,523
Ratio of earnings to fixed charges(7).... - 1.36x 1.53x 1.17x -
BALANCE SHEET DATA:
- ------------------
Total assets............................. $179,733 $190,848 $206,148 $221,699 $209,100
Total debt............................... 149,484 143,843 161,459 168,392 166,727
Total partners' capital (deficit)........ (5,343) 3,042 7,968 11,925 3,165
CASH FLOW PRESENTATION:
- ----------------------
Cash from operating activities........... n/a $ 14,792 $ 13,084 $ 12,766 $ 14,668
Cash from investing activities........... n/a (11,045) (18,915) (21,130) (5,337)
Cash from financing activities........... n/a 938 2,441 10,229 (11,837)
</TABLE>
12
<PAGE>
___________
(1) Includes depreciation and amortization relating to the Company's Stopping
Centers. Amortization of deferred debt issuance costs is classified as
interest expense.
(2) Extraordinary item reflects write-off of debt restructuring costs
associated with retired debt.
(3) No provision for income taxes is reflected in the financial statements as
the Company is a partnership for which taxable income and tax deductions
are passed through to the individual partners.
(4) EBITDA represents operating income before deducting depreciation,
amortization and interest. EBITDA data, which are not a measure of
financial performance under generally accepted accounting principles, are
presented because such data are used by certain investors to determine a
company's ability to meet historical debt service requirements. Such data
should not be considered as an alternative to net income, as an indicator
of the Company's operating performance or as an alternative to cash flows
as a measure of liquidity.
(5) EBITDA results for fiscal 1996 excludes certain one-time charges related to
the Recapitalization and the change in management and operations. Included
in the one-time charges were $2.5 million related to severance and hiring
costs; $1.4 million in obsolete inventory reserves, included in cost of
sales; and $.5 million in insurance related costs.
(6) Capital expenditures primarily represent the cost of new Stopping Centers
and renovations of existing Stopping Centers.
(7) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as net income plus fixed charges. Fixed charges
consist of interest expense (including the amortization of deferred debt
issuance costs) and the portion of rental expense that is representative of
the interest factor (deemed to be one-third of minimum operating lease
rentals).
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
General
Recapitalization
On January 30, 1997, the Company consummated a transaction entered into in
October 1996, in which Chartwell, Mobil Long Haul and the Cardwell Group entered
into an agreement under which Chartwell and Mobil Long Haul invested $20.7
million and $15.0 million, respectively (the "Equity Investment"), in order to
directly acquire the partnership interests of the Company owned by the Fremont
Partners for approximately $25.6 million and invested approximately $10.1
million in the Company. The Cardwell Group maintained its capital investment in
the Company. Kirschner invested $1.0 million in the Company. Following the
Equity Investment and the Kirschner Investment, the common partnership interests
of the Company are owned by Chartwell (approximately 50.8%), the Cardwell Group
(approximately 39.9%), Mobil Long Haul (approximately 7.4%), and Kirschner
(2.0%), and the preferred partnership interests are owned by Mobil Long Haul
($12.0 million) and the Cardwell Group ($7.6 million). Chartwell and the
Cardwell Group own both general and limited partnership interests and Mobil Long
Haul and Kirschner own only limited partnership interests. Mobil and the Company
also entered into certain supply and marketing agreements.
As part of the Recapitalization, the Company issued $135 million of 10 1/2%
Senior unsecured notes due 2007, (the "New Notes") and made a tender offer (the
"Tender Offer") for, and repurchased approximately 94% of its 12 1/2% Senior
Notes due 2002 (the "Existing Notes") and approximately 99% of the outstanding
debt warrants (the "Debt Warrants").
The "Recapitalization" consists of the Equity Investment, the Tender Offer,
the Kirschner Investment, the issuance of the New Notes and the entering into
the New Credit Agreement.
The Company also replaced its senior collateralized credit facility (the
"Existing Credit Agreement") with an amended and restated senior collateralized
credit facility (the "New Credit Agreement"). The New Credit Agreement consists
of a $25.0 million revolving credit facility (the "Revolving Credit Facility"),
a $14.0 million Term Loan A, a $30.0 million Term Loan B and a $40.0 million
expansion facility (the "Expansion Facility"). The New Credit Agreement is
collateralized by substantially all of the Company's assets and the partnership
interests of Mobil Long Haul and Chartwell and guaranteed by each of the
Company's subsidiaries, which guarantees in turn are collateralized by
substantially all of such subsidiaries' assets.
In the first quarter of 1997, the Company will recognize an extraordinary
charge of $13.5 million relating to amendment of the Existing Credit Agreement,
retirement of the Existing Notes and Debt Warrants and the write-off of deferred
financing costs.
The following table sets forth the development of the Company's Stopping Center
network since 1992.
<TABLE>
<CAPTION>
Open at the end of
----------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
Company-operated Stopping Centers:
<S> <C> <C> <C> <C> <C>
Full-sized........................ 20 21 21 23 23
Petro:2 :......................... 3 3 3 3 3
Franchised.......................... 12 12 13 15 16
Independently operated.............. 1 1 1 - -
---- ---- ---- ---- ----
Total Stopping Centers............ 36 37 38 41 42
==== ==== ==== ==== ====
</TABLE>
14
<PAGE>
All of the Stopping Centers opened since January 1, 1993 were newly
constructed facilities, except Medford, Oregon, where the Company purchased an
existing truck stop and converted it into a Stopping Center. In addition to the
new full-sized facilities, the Company opened new Petro:Lubes at its San
Antonio, Beaumont and Medford locations in June 1994, January 1995 and April
1996, respectively. At December 31, 1996, there were no new Company-operated
facilities under construction. However a new franchisee location located in
Scranton, Pennsylvania was under construction with an anticipated opening in the
second quarter of 1997. The approximate construction cost of a new stopping
center (exclusive of land) is between $7.0 and $9.5 million.
The Company has never closed a Stopping Center and has no current plans to
do so.
Revenues. The Company's revenues at each of its full-sized Stopping
Centers are recorded through the following divisions: diesel fuel island,
restaurant, Petro:Lube and travel and convenience store. The Company's Petro:2
division includes all activities at its Petro:2 units except for revenues from
the Petro:Lube located at the Petro:2. Sales at the Company's store located in
the fuel island building, as well as its revenues from the truck weighing
scales, are included in the results of the diesel fuel island division. The
restaurant division includes the freestanding Iron Skillet restaurant in
Arlington, Texas. The travel and convenience store division includes the
Company's revenues from other activities at the Stopping Center, including
showers, laundry, vending machines, video games and other retail activities, as
well as gasoline and auto diesel sales. Other includes franchisee fees and
income from video poker machines, discounts on franchisee receivables, fuel
hauling, fast food restaurants, motel and RV park.
In May 1994, the Company purchased the rights to certain revenues (the
"Coinage Arrangement") from certain specified activities (pay telephone
services, video games and rentals of retail space) at 14 Stopping Centers.
The Company's fuel revenues and cost of sales include significant amounts
of federal and state motor fuel taxes. Such taxes were $140,460,000,
$150,360,000 and $175,873,000 for the years ended December 30, 1994, December
29, 1995 and December 31, 1996, respectively.
Taxes. No provision for income taxes is reflected in the financial
statements as the Company is a partnership for which taxable income and tax
deductions are passed through to the partners.
15
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DATA
Year ended Percent Year ended Percent Year ended Percent
December 30, of net December 29, of net December 31, of net
1994 revenues 1995 revenues 1996 revenues
------------ --------- -------------- -------- ------------ --------
(in thousands)
--------------
Net Revenues:
<S> <C> <C> <C> <C> <C> <C>
Diesel fuel island.................... $318,761 65.3% $351,136 65.9% $435,071 68.3%
Restaurant............................ 43,877 9.0 47,387 8.8 47,335 7.4
Petro:Lube............................ 34,160 7.0 36,198 6.8 44,082 6.9
Travel and convenience store.......... 54,733 11.2 61,590 11.6 67,104 10.5
Petro:2............................... 26,798 5.5 27,734 5.2 33,584 5.3
Other................................. 9,564 2.0 8,970 1.7 9,881 1.6
-------- ----- -------- ----- -------- -----
Total............................... $487,893 100.0% $533,015 100.0% $637,057 100.0%
======== ===== ======== ===== ======== =====
Operating Contribution:
Diesel fuel island.................... $ 16,836 5.3% $ 16,357 4.7% $ 16,461 3.8%
Restaurant............................ 7,655 17.4 8,074 17.0 7,534 15.9
Petro:Lube............................ 7,636 22.3 7,278 20.1 7,863 17.8
Travel and convenience store.......... 4,357 8.0 5,988 9.7 4,569 6.8
Petro:2............................... 1,385 5.2 1,150 4.1 853 2.5
Other................................. 11,620 n/a 9,223 n/a 6,824 n/a
-------- ----- -------- ----- -------- -----
Total............................... 49,489 10.1% 48,070 9..0% 44,104 6.9%
-------- ===== -------- ===== -------- =====
Employee severance, benefit and
placement expenses -- -- 2,534
General and administrative
expenses.............................. 11,448 12,053 13,925
Recapitalization costs -- -- 2,938
Depreciation and
amortization 8,851 11,144 12,204
Interest expense 18,711 21,098 21,263
Income before extra-
ordinary item 10,479 3,775 (8,760)
Extraordinary item 5,250 - -
Minority interest 191 - -
-------- -------- --------
Net Income (loss)(1) $ 5,038 $ 3,775 $ (8,760)
======== ======== ========
</TABLE>
- ---------------
(1) Net income for 1996 is after certain one-time charges related to the
Recapitalization and the change in management and operations. Included in
the one-time charges to operating income were $2.5 million related to
severance and hiring costs; $1.4 million in obsolete inventory reserves
(included in cost of sales), and $.5 million in insurance related costs.
Costs incurred in connection with the Recapitalization amounted to $2.9
million.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 29, 1995
Overview. The Company's net revenues increased $104,042,000 or 19.5% to
$637,057,000 for the year ended December 31, 1996. Revenues from comparable
units contributed $94,273,000 or 90.6% of the increase. A Stopping Center is
considered a "comparable unit" as to a particular period in the current year if
it was open during the same period of the prior year. The increase in 1996 net
revenues was due principally to a 13.3% increase in diesel gallons sold, an
11.2% increase in fuel sales price per diesel gallon sold and a 21.8% increase
in Petro:Lube sales. Although net revenues increased in 1996, operating
contribution, which is defined as net revenues less cost of sales and operating
expenses, declined 8.3%. This was due to a reduction in gross margin from 22.7%
of net revenues in 1995 to 19.7% of net revenues in 1996 combined with an 11.6%
increase in operating expenses. The decline in gross margin percentage and
increase in operating expenses is explained in the following presentation of the
profit centers.
16
<PAGE>
Diesel Fuel Island. Revenues increased 23.9% to $435,071,000 in 1996 from
$351,136,000 in 1995. The increase in revenues was attributable predominately
to revenues of $6,279,000 from Ocala and Medford locations and a $77,656,000 or
22.3% increase in revenues from comparable units, due primarily to higher fuel
volume which increased 13.2% combined with a higher selling price per gallon
which increased 11.2%. Fuel margin per gallon decreased by 3.7% in the period.
Operating contribution was flat with 1995 due to higher operating expenses,
offset by an increase in gross margin as a result of higher fuel volume.
Restaurant. Revenues of $47,335,000 were flat with the 1995 period.
Revenues from new locations in Ocala and Medford contributed $901,000 while
revenues from comparable units were down a similar amount. Operating
contribution declined $540,000 to $7,534,000 in 1996. On a comparable unit
basis, operating contribution declined $660,000 in the 1996 period. The decline
in operating contribution was attributable to the decline in revenues partially
offset by a decline in cost of sales, while operating expense were flat.
Petro:Lube. Revenues increased $7,884,000 to $44,082,000 in the year ended
December 31, 1996 from $36,198,000 in 1995. The increase was due to growth in
comparable units of $6,576,000 or 18.2% combined with a $1,308,000 increase due
to new locations in Franklin and Medford. Operating contribution increased
$585,000 due to a $2,726,000 or 13.7% increase in gross margin offset by a
$2,141,000 increase in operating expense, primarily due to higher employee
expense associated with increased revenues.
Travel and Convenience Stores. Revenues increased $5,514,000 to
$67,104,000 in 1996 from $61,590,000 in the 1995 period. The increase was due
to a $3,965,000 or 6.4% increase in revenues at comparable units combined with
revenues of $1,549,000 from the Ocala and Medford locations. The increased
revenue at comparable units was due to increased fuel sales of $2,078,000 due to
a 8.0% increase in volume and $1,887,000 due to a higher per gallon sales price
of fuel of 7.0%. Operating contribution declined $1,419,000. The decline was
due to decreased fuel margins combined with higher operating expenses.
Petro:2. Revenues increased $5,850,000 to $33,584,000 in 1996 from
$27,734,000 in 1995. The increase was attributable to a 16.1% increase in fuel
gallons sold combined with a 10.1% increase in average price per gallon sold.
Operating contribution declined $297,000 despite the increase in revenues, due
to a 3.3% decline in fuel margins per gallon combined with an increase in
operating expenses.
Other. Revenues increased $911,000 to $9,881,000 in 1996 from $8,970,000 in
1995. The increase was attributable primarily to increased revenues of
$1,117,000 from the fast food locations and the Medford motel and recreational
vehicle park. The increase was offset slightly by declines in coinage revenue
and video poker at the Company's two Louisiana locations. During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish in which the operations were conducted voted to allow the continued
operation of video poker machines. On November 5, 1996, the parish in which the
Shreveport unit is located voted to continue to allow video poker operations,
while the parish in which the Hammond unit is located voted to disallow video
poker operations. The phase out period for the Hammond location is through June
1999. During the year ended December 31, 1996, the Hammond location generated
approximately $841,000 of revenue from video poker.
Costs and Expenses: Total costs and expenses increased 22.3% from
$508,142,000 in 1995 to $621,616,000 in 1996. The increase related to higher
cost of sales due to higher fuel costs, costs associated with new locations,
increase in general and administrative expense, increase in depreciation and
amortization and employee severance, benefit and placement expenses. Increase in
cost of sales was attributable in part to adjustments related to establishment
of inventory reserves of approximately $1,400,000. General and administrative
expenses increased $1,872,000 due to increased employee expense and professional
fees associated with the management changes. Depreciation and amortization
increased due to additional 1996 capital expenditures combined with full year
depreciation of the Medford and Ocala locations. Employee severance, benefit and
placement expenses relate primarily to severance costs of existing management
and placement and relocation of new management as a result of the sale of the
partnership interest.
During the fourth quarter of 1996, the Company recognized certain one-time
charges of $2.5 million related to severance and hiring costs, $1.4 million in
obsolete inventory and $.5 million in insurance related costs.
17
<PAGE>
Recapitalization Costs. This represents costs incurred by the Company in
1996 associated with the sale of the partnership interest. Costs include legal
and professional fees combined with the investment banking fees paid with
respect to the sale of the partnership interest.
Interest Expense. Interest expense of $21,263,000 in 1996 was flat
compared to 1995, due to lower average level of debt outstanding offset by an
increase in the interest rate.
Net Income. The Company's net income declined $12,535,000 to a reported net
loss of $8,760,000 in 1996 compared to reported net income of $3,775,000 in
1995.
YEAR ENDED DECEMBER 29, 1995 COMPARED TO YEAR ENDED DECEMBER 30, 1994
Overview. The Company's net revenues increased $45,122,000 or 9.2% to
$533,015,000 for the year ended December 29, 1995. Revenues from units opened
before 1994 ("comparable units") contributed $21,097,000 or 4.3% of the
increase, coupled with revenues from new locations in Medford, Oregon and Ocala,
Florida, which contributed an additional 4.9% or $24,025,000 in revenues during
1995. Although net revenues increased 9.2% in 1995, due principally to
increases in fuel volume and higher travel and convenience store sales,
operating contribution, which is defined as net revenues less cost of sales and
operating expenses, declined 2.9% to $48,070,000. This was due to a reduction
in gross margin from 23.5% of net revenues in 1994 to 22.8% of net revenues in
1995 combined with a 12.4% increase in operating expenses in total and a 4.7%
increase in operating expenses on a comparable unit basis. The decline in gross
margin percentage and increase in operating expenses is explained in the
following presentation of the profit centers.
Diesel Fuel Island. Revenues increased 10.2% to $351,136,000 in 1995 from
$318,761,000 in 1994. The increase in revenues was attributable in part to
revenues from the Medford and Ocala locations which contributed 5.0% or
$16,029,000 of revenues and a 5.2% or $16,345,000 increase in revenues from
comparable units. Operating contribution decreased by 2.9% in total and 5.4% on
a comparable unit basis. The decline in operating contribution was due to a
6.1% reduction in fuel margin per gallon as a result of a shift in margin mix to
higher volume fleet business which is generally "cost plus" or requires higher
levels of discounts. In addition to lower fuel margins, higher levels of
operating expense, primarily third party billing fees, contributed to the
decline.
Restaurant. Revenues increased 8.0% to $47,387,000 in 1995 from $43,877,000
in 1994. Of the 8.0% increase, 5.9% came from the two new locations and 2.1%
came from comparable units. Operating contribution increased 5.5% but declined
as a percent of revenue. Gross margin as a percent of revenue declined slightly
due to higher produce and meat costs. Operating expenses increased 7.5% in
total, but were flat with 1994 on a comparable unit basis.
Petro:Lube. Revenues increased 6.0% to $36,198,000 in 1995 from $34,160,000
in 1994. The increase was due to $1,354,000 of revenues from new lubes at the
Beaumont, Texas location, which opened in January 1995 and the Ocala, Florida
location, which opened June 1995, combined with a 2.0% improvement in net
revenues from comparable units. Operating contribution declined 4.7% in total
and 7.8% on a comparable unit basis. This was primarily due to an 11.0% price
increase in oil costs, which was absorbed by the Company and a reduction in tire
margins in an effort to stimulate tire sales.
Travel and Convenience Stores. Revenues increased 12.5% to $61,590,000 in
1995 from $54,733,000 in 1994. The increase was due to revenues of $3,788,000
from the new locations in Medford, Oregon and Ocala, Florida combined with a
5.6% or $3,069,000 increase in revenues at comparable units. Of the revenue
increase at comparable units, approximately $832,000 was Coinage Arrangement
revenue reported as Other in 1994. Operating contribution increased 37.4% in
total and 34.9% on a comparable unit basis. Excluding the revenue from the
Coinage Arrangement, operating contribution increased 18.3% due to improved fuel
margins in 1995.
18
<PAGE>
Petro:2. Revenues increased 3.5% to $27,734,000 in 1995 as compared to
$26,798,000 in 1994, attributable to a 3.8% increase in fuel gallons sold.
Despite the increase in revenues, the operating contribution declined $235,000
due to lower fuel margins (as described above in the fuel island section)
combined with an increase in operating expense.
Other. Other revenues declined 6.3%, from $9,564,000 for the year ended
December 30, 1994 to $8,970,000 for the year ended December 29, 1995, due to a
$924,000 decline in video poker revenues and a reclassification of revenues from
the Coinage Arrangement of $832,000 for 1995. The declines were partially
offset by revenues from the motel and recreational vehicle park at the Medford
location and revenues from the fast food establishments at three locations. The
video poker decline was due to increased competition from other video poker
operations and riverboat gambling operations, as well as an increase in the tax
payable to the state of Louisiana. The operating contribution decline of
$2,397,000 was due primarily to the reduction of revenues from video poker and
the Coinage Arrangement, which have no direct expense associated with them, and
are a direct reduction of operating contribution.
Costs and Expenses: Total costs and expenses increased 10.8% from
$458,703,000 for the year ended December 30, 1994 to $508,142,000 for the year
ended December 29, 1995 and, as a percentage of net revenues, from 94.0% in the
1994 period to 95.3% in the comparable period of 1995. Costs of sales increased
$38,458,000 or 10.3% from 1994 to 1995 due primarily to $18,523,000 associated
with the new locations and an increase in costs in the diesel fuel island,
restaurants and Petro:lubes on a comparable unit basis. Operating expenses
increased $8,084,000 or 12.4% to $73,052,000 in 1995. This increase was due
primarily to $4,555,000 in operating expenses from the Medford and Ocala
locations combined with a $3,529,000 increase in comparable units, which was
primarily in the diesel fuel islands, Petro:lube, and travel and convenience
stores. General and administrative expenses increased $605,000 or 5.3% from
$11,448,000 in 1994 to $12,053,000 in 1995. As a result of the above, operating
income declined 14.8% from $29,190,000 in the 1994 period to $24,873,000 in the
1995 period.
Depreciation and Amortization. Depreciation and amortization of the Company
relates to depreciation of the physical assets of the Company and the
amortization of the Coinage Arrangement and other assets. The increase of
$2,293,000 from 1994 to 1995 relates to a full year amortization of the Coinage
Arrangement combined with an increase in depreciation expense related to the new
sites in Medford and Ocala.
Interest Expense. Interest expense increased $2,387,000 during 1995 as
compared to 1994, due primarily to higher levels of debt outstanding, higher
amortization of debt issuance costs related to a full year and higher interest
rates during the year.
Extraordinary Charge. In connection with its Refinancing completed in may
1994, the Company incurred an extraordinary charge of $5,250,000 for the write
off of (i) the unamortized debt issuance costs associated with the Company's
prior revolving credit facility (the "Congress Revolver"), and certain mortgage
notes payable to various lenders (the "Old Mortgage Facilities") and (ii) the
prepayment premium paid in connection with the repayment of certain of these
facilities.
Net Income. Net income of the Company decreased to $3,775,000 in 1995 from
$5,038,000 in 1994 while income before extraordinary item and minority interest
declined from $10,479,000 in 1994 to $3,775,000 in 1995. The decline was due to
higher interest expense combined with a reduction in operating income due to
higher costs of sales and operating expenses and a $2,293,000 increase in
depreciation and amortization from 1994 to 1995.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures totaled $5,523,000 for 1996 and $19,508,000 for 1995.
Included in capital expenditures for 1996 were funds spent on the construction
of the new lubes in Medford, Oregon and Franklin, Kentucky. Capital
expenditures in 1995 included funds spent on the acquisition of Medford, Oregon
and the construction of the Ocala, Florida Stopping Center.
19
<PAGE>
At December 31, 1996, the Company had availability on its revolving line of
credit of approximately $9,711,000.
Acquisition. In January 1995, the Company acquired an existing truck stop
in Medford, Oregon. The Medford facility is designed similarly to the Company's
Stopping Centers with a diesel fuel island, restaurant, travel store and free-
standing convenience store. In addition, this location has a motel and RV park.
The Company constructed a Petro:Lube at this location which opened early in the
second quarter of 1996. The Company utilized a portion of its revolving line of
credit under the Existing Credit Agreement to fund the construction of the
Petro:Lube.
Expansion: In June 1995, the Company opened its Ocala, Florida location.
The Ocala location is a typical Stopping Center with the addition of a free
standing Wendy's (branded food restaurant) that opened in October 1995. In June
1996, the Company opened its first stand-alone Petro:Lube operation. The
construction costs of the Ocala, Florida unit and new stand-alone Petro:Lube
were funded by a combination of borrowing on the revolving line of credit under
the Existing Credit Agreement and internally generated funds.
Insurance: The Company is partially self-insured with respect to workers'
compensation and general liability. During 1996, the Company paid claims
aggregating $1,302,000 and $331,000 relating to workers compensation and general
liability claims, respectively. The Company believes it provides an accrual
adequate to cover both known and incurred but not reported claims.
The Company had negative working capital of $13,863,000 at December 31,
1996, $9,607,000 at December 29, 1995 and $8,922,000 at December 30, 1994.
Negative working capital is normal in the truckstop industry. The truckstop
business is an industry that generates a large amount of cash business with
relatively low levels of inventories and receivables, as a percentage of
revenues. A substantial majority of the Company's sales are cash (or the
equivalent in the case of credit card sales or sales paid for by check on a
daily basis by third-party billing companies). Diesel fuel inventory turns every
two to three days, and store merchandise inventories normally turn every 90
days. Based upon the above, the overall inventory turns approximately every 13
days.
Recent Developments:
In connection with the Recapitalization, the Existing Credit Agreement was
repaid with borrowings under the New Credit Agreement, the net proceeds from the
sale of the Notes, a portion of the proceeds of the Equity Investment and the
proceeds of the Kirschner Investment. The New Credit Agreement provides for a
$25.0 million Revolving Credit Facility, a $40.0 million Expansion Facility, a
$14.0 million Term Loan A and a $30.0 million Term Loan B.
The Revolving Credit Facility permits the Company to borrow, repay and
reborrow up to $25.0 million at any time until the fifth anniversary of the
Closing Date, the proceeds of which may be used for working capital and other
corporate purposes. Up to $5.0 million of the Revolving Credit Facility is
available for the issuance of standby and documentary letters of credit. The
Expansion Facility permits the Company to borrow, repay and reborrow up to $40.0
million for the acquisition and development of new Stopping Centers and stand-
alone Petro:Lubes at any time until the third anniversary of the Closing. Term
Loan A is repayable in 18 quarterly installments, commencing on September 30,
1997. Term Loan B is repayable in 26 quarterly installments commencing on
September 30, 1997.
Aggregate yearly term loan principal payments under the New Credit
Agreement will be as follows: (i) $2.0 million in 1997; (ii) $3.0 million in
1998; (iii) $4.5 million in 1999; (iv) $5.5 million in 2000; (v) $7.5 million in
2001; (vi) $13.5 million in 2002; and (vii) $14.0 million in 2003.
Borrowings under the New Credit Agreement are collateralized by
substantially all of the Company's assets and the partnership interests of Mobil
Long Haul and Chartwell and guaranteed by each of the Company's subsidiaries,
which guarantees in turn are collateralized by substantially all of such
subsidiaries' assets.
Management of the Company believes that internally generated funds,
together with amounts available under the Revolving Credit Facility, will be
sufficient to satisfy its cash requirements for operations through 1997 and the
foreseeable future thereafter. The Company also expects that expansion and
future acquisitions would be
20
<PAGE>
financed from funds generated from operations, borrowings under the Revolving
Credit Facility and the Expansion Facility and additional financings.
ENVIRONMENTAL
Accruals for environmental matters are recorded in operating expenses when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites. Accrued liabilities are exclusive of claims against third
parties and are not discounted.
The Company is subject to contingencies pursuant to environmental laws and
regulations that in the future may require the Company to take action to correct
the effects on the environment of prior disposal practices or releases of
chemical or petroleum substances by the Company or other parties. The Company
has accrued for certain environmental remediation activities consistent with the
policy set forth in Note 2 to the consolidated financial statements. At
December 31, 1996, such accrual amounted to approximately $217,000 and, in
management's opinion, was appropriate based on existing facts and circumstances.
Under the most adverse circumstances, however, this potential liability could be
significantly higher. In the event that future remediation expenditures are in
excess of amounts accrued, management does not anticipate that they will have a
material adverse effect on the consolidated financial position or results of
operations of the Company. At December 31, 1996, the Company has recognized
approximately $256,000 in the consolidated balance sheet related to recoveries
of certain remediation costs from third parties.
21
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PETRO STOPPING CENTERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 29, December 31,
1995 1996
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 5,688 $ 3,182
Accounts receivable, net of
allowance for uncollectible
accounts of $608 in 1995
and $321 in 1996 11,468 10,401
Inventories 16,319 15,195
Other current assets 1,728 1,404
Due from affiliates 1,520 2,091
-------- --------
Total current assets 36,723 32,273
Property and equipment, net 162,348 159,539
Deferred debt issuance costs and
Company organization costs, net of
accumulated amortization of
$4,546 in 1995 and $6,728 in 1996 13,370 11,305
Other assets 9,258 5,983
-------- --------
Total assets $221,699 $209,100
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of long-term debt $ 4,948 $ 6,928
Trade accounts payable 14,188 15,723
Accrued expenses and other 25,166 21,160
liabilities
Due to affiliates 2,028 2,325
-------- --------
Total current liabilities 46,330 46,136
Notes payable 20,578 21,639
Long-term debt, excluding current 142,866 138,160
portion -------- --------
Total liabilities 209,774 205,935
-------- --------
Commitments and contingencies
Partners' capital:
General partners (7,204) (8,477)
Limited partners 19,129 11,642
-------- --------
Total partners' capital 11,925 3,165
-------- --------
Total liabilities and $221,699 $209,100
partners' capital ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
22
<PAGE>
PETRO STOPPING CENTERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 30, December 29, December 31,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net revenues (including motor fuel
taxes):
Diesel fuel island $318,761 $351,136 $435,071
Restaurant 43,877 47,387 47,335
Petro:Lube 34,160 36,198 44,082
Travel and convenience stores 54,733 61,590 67,104
Petro:2 26,798 27,734 33,584
Other 9,564 8,970 9,881
-------- -------- --------
Total net revenues 487,893 533,015 637,057
-------- -------- --------
Costs and expenses:
Cost of sales (including motor fuel
taxes), exclusive of
depreciation and amortization 373,436 411,894 511,431
Operating expenses 64,968 73,052 81,522
General and administrative 11,448 12,053 13,925
Employee severance, benefit and
placement expenses -- -- 2,534
Depreciation and amortization 8,851 11,144 12,204
-------- -------- --------
Total costs and expenses 458,703 508,142 621,616
-------- -------- --------
Operating income 29,190 24,873 15,441
Recapitalization costs -- -- 2,938
Interest expense 18,711 21,098 21,263
-------- -------- --------
Income (loss) before extraordinary
item and minority interest 10,479 3,775 (8,760)
Extraordinary item - write off of debt
restructuring costs associated
with retired debt 5,250 -- --
Minority interest 191 -- --
-------- -------- --------
Net income (loss) $ 5,038 $ 3,775 $ (8,760)
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
23
<PAGE>
PETRO STOPPING CENTERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Years ended December 30, 1994, December 29, 1995 and December 31, 1996
(in thousands)
<TABLE>
<CAPTION>
General Limited Total Partners'
Partners Partners Capital
--------- -------- ---------------
<S> <C> <C> <C>
Balances, December 31, 1993 $(8,890) $11,932 $ 3,042
Distributions (68) (44) (112)
Net income 718 4,320 5,038
------- ------- -------
Balances, December 30, 1994 (8,240) 16,208 7,968
Conversion of minority interest 506 - 506
Distributions (15) (309) (324)
Net income 545 3,230 3,775
------- ------- -------
Balances, December 29, 1995 (7,204) 19,129 11,925
Net loss (1,273) (7,487) (8,760)
------- ------- -------
Balances, December 31, 1996 $(8,477) $11,642 $ 3,165
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements
24
<PAGE>
PETRO STOPPING CENTERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 30, December 29, December 31,
1994 1995 1996
------------ ------------- -------------
<S> <C> <C> <C>
Net income (loss) $ 5,038 $ 3,775 $ (8,760)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 8,851 11,144 12,204
Extraordinary item-write off of debt
restructuring costs associated 5,250 - -
with retired debt
Deferred debt issuance cost 1,107 1,056 1,485
amortization
Accretion of original issue discount - 845 978
Provision for losses on accounts (351) 297 215
receivable
Increase (decrease) from changes in:
Accounts receivable (1,486) (2,361) 852
Inventories (1,563) (1,838) 1,124
Other current assets (962) (118) 324
Due from affiliates 1,559 (545) (571)
Due to affiliates (889) 436 297
Trade accounts payable (1,760) 270 1,535
Accrued expenses and other (1,710) (195) 4,985
liabilities --------- -------- --------
Net cash provided by operating 13,084 12,766 14,668
activities --------- -------- --------
Cash flows used in investing
activities:
Purchase of property and equipment (8,428) (19,508) (5,523)
(Increase) decrease in other (10,487) (1,622) 186
assets, net --------- -------- --------
Net cash (used in) investing
activities (18,915) (21,130) (5,337)
--------- -------- --------
Cash flows provided by financing
activities:
Repayments of notes payable (18,401) (59,422) (25,000)
Proceeds from notes payable 19,401 69,000 26,061
Repayments of long-term debt (133,843) (3,491) (3,704)
Proceeds from long-term debt 150,459 - -
Distributions to partners (112) (324) -
Capital contributions - - -
Payment of debt issuance costs (12,180) (190) (203)
Increase (decrease) in cash (3,077) 4,656 (8,991)
overdrafts
Other, net 194 - -
--------- -------- --------
Net cash provided by (used in)
financing activities 2,441 10,229 (11,837)
--------- -------- --------
Net increase (decrease) in cash (3,390) 1,865 (2,506)
Cash, beginning of period 7,213 3,823 5,688
--------- -------- --------
Cash, end of period $ 3,823 $ 5,688 $ 3,182
========= ======== ========
- ----------------------------------------------------------------------------------
Supplemental cash flow information--
Interest paid during the period, net of
capitalized interest of $62, $ 19,102 $ 19,785 $ 18,364
$515 and $80 in 1994, 1995 and 1996
Non-cash transactions-
Minority interest converted to equity - 506 -
</TABLE>
See accompanying notes to consolidated financial statements
25
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
1. COMPANY FORMATION AND DESCRIPTION OF BUSINESS
COMPANY FORMATION
Petro PSC Properties, L.P. ("Petro Properties"), a Delaware limited
partnership, was formed effective April 30, 1992 for the ownership, operation,
management and development of the Petro Stopping Centers network. The partners
were as follows:
GENERAL PARTNERS
Petro, Inc.
Roadside, Inc. ("Roadside"), an entity owned by Fremont Group, Inc.
LIMITED PARTNERS
Various individuals and entities affiliated with Petro, Inc.
Fremont Group, Inc.
Petro, Inc. and the various individuals and entities affiliated with
Petro, Inc. are collectively referred to herein as the "Cardwell Group".
Roadside and the Fremont Group, Inc. are jointly referred to herein as the
"Fremont Group".
Petro PSC, L.P. ("Petro PSC"), a Delaware limited partnership, was also
formed effective April 30, 1992 to manage the day-to-day operations of the
Petro Stopping Centers network. At formation, Roadside and Petro, Inc. each
received a 1% general partnership interest, and Petro Properties received a 98%
limited partner interest in exchange for certain net operating assets.
Effective December 31, 1994, an Agreement of Merger and Name Change was
executed whereby Petro PSC was merged into Petro Properties. The merger was
consummated pursuant to the Delaware Revised Uniform Limited Partnership Act.
As part of the merger, the name of Petro Properties was changed to "Petro
Stopping Centers, L.P." referred to herein as the "Company" or the
"Partnership". The following table reflects the Partnership ownership interest
immediately following the merger:
<TABLE>
<CAPTION>
PARTNER TYPE OF INTEREST PERCENTAGE
--------- ---------------- ----------
INTEREST
--------
<S> <C> <C>
Roadside, Inc. General Partner .92%
Petro, Inc. General Partner 13.53
Fremont Group, Inc. Limited Partner 44.25
James A. Cardwell, Sr. Limited Partner 35.77
James A. Cardwell, Jr. Limited Partner 1.92
JAJCO II, Inc. Limited Partner 3.61
------
100.00%
======
</TABLE>
There was no material financial statement impact resulting from the merger or
name change.
On January 30, 1997 the Company completed a recapitalization. As part of
the recapitalization, affiliates of Chartwell Investments Inc. became limited
and general partners and an affiliate of Mobil Oil Corporation became a limited
partner and the Fremont Group sold all their partnership interests (See Note
17).
DESCRIPTION OF BUSINESS
The Company operates large, multi-service truck stops in the United States.
The Company's facilities, which are known as "Petro Stopping Centers" (the
"Stopping Centers"), are located along interstate highways and typically offer
diesel fuel, gasoline, home-style restaurants, truck preventative maintenance
centers, travel and convenience stores and a range of other products, services
and amenities to commercial truck drivers, as well as other highway motorists
and local residents. At December 31, 1996, the Company's network consisted of
42 Stopping Centers located in 27 states, of which 26 were operated by the
Company and 16 were franchised.
26
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company include
the consolidated balance sheets, statements of operations, changes in partners'
capital and cash flows of Petro Stopping Centers, L.P. and its wholly-owned
subsidiaries, Petro Financial Corporation and Petro Distributing, Inc. All
significant intercompany balances have been eliminated in consolidation.
Beginning in 1994, the Company adopted a 52/53 week fiscal year, which ends on
the Friday closest to December 31. Beginning in 1996, the Company adopted a
calendar year fiscal year, which ended on December 31.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and accounts
receivable. Accounts receivable are primarily due from national and regional
commercial trucking companies, and include accounts receivable purchased at a
discount from the Company's franchisees. The receivables are not
collateralized, however the risk is limited due to the large number of entities
comprising the Company's customer base and their dispersion across geographic
regions. At December 31, 1996, the Company had no significant concentrations of
credit risk.
CASH AND CASH EQUIVALENTS
The Company considers as cash equivalents all highly liquid investments
with an original maturity of three months or less.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are reviewed on a regular basis and the allowance for
doubtful accounts is established to reserve for specific accounts believed to be
uncollectible. In addition, the allowance provides a reserve for the remaining
accounts not specifically identified.
INVENTORIES
Inventories are stated at the lower of cost or market as determined by the
first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment is stated at amortized historical cost.
Depreciation and amortization are provided generally under the straight-line
method over the estimated useful lives of the respective assets or the lease
term, whichever is less. Repairs and maintenance are charged to expense as
incurred, and amounted to $2,898,000, $2,893,000 and $2,785,000 for the years
ended December 30, 1994, December 29, 1995 and December 31, 1996, respectively.
Renewals and betterments are capitalized. Gains or losses on disposal of
property and equipment are credited or charged to income.
Facilities under development are recorded at cost, and include capitalized
interest costs associated with the development of a project. These costs are
classified as facilities under development until the project is completed, at
which time the costs are transferred to the appropriate property and equipment
accounts.
ORGANIZATION COSTS
Costs incurred in connection with the formation of the Company, which
primarily include legal expenses, private placement fees and other due diligence
expenditures, are being amortized using the straight-line method over a ten-year
period.
27
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEBT ISSUANCE COSTS
Costs incurred in obtaining long-term financing are amortized over the life
of the related debt using a method which approximates the interest method.
SELF INSURANCE
The Company is self-insured for general liability, workers' compensation,
and group health benefit claims, up to stop-loss amounts ranging from $75,000 to
$250,000 on a per-occurrence basis. Provisions for these self-insurance
programs are made for both estimated losses on known claims and claims incurred
but not reported, based on claims history.
ADVERTISING AND PROMOTION
Costs incurred in connection with advertising and promotion are expensed as
incurred, net of reimbursements from franchisees. Net advertising and promotion
expenses of $1,786,000, $1,688,000 and $2,156,000 were incurred for the years
ended December 30, 1994, December 29, 1995 and December 31, 1996 respectively,
and are included in operating expenses in the accompanying consolidated
statements of operations.
MOTOR FUEL TAXES
Certain motor fuel taxes are collected from consumers and remitted to
governmental agencies by the Company. Such taxes were $140,460,000,
$150,360,000 and $175,873,000 for the years ended December 30, 1994, December
29, 1995 and December 31, 1996, respectively, and are included in net revenues
and cost of sales in the accompanying consolidated statements of operations.
ENVIRONMENTAL LIABILITIES AND EXPENDITURES
Accruals for environmental matters are recorded in operating expenses when
it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated. The measurement of environmental
liabilities is based on an evaluation of currently available facts with respect
to each individual site and considers factors such as existing technology,
presently enacted laws and regulations and prior experience in remediation of
contaminated sites. Accrued liabilities are exclusive of claims against third
parties and are not discounted.
FRANCHISE REVENUES
The Company recognizes net revenue from individual franchises and initial
training fees when substantially all significant services to be provided by the
Company have been performed. Continuing franchise fees, which are based
generally upon a percentage of the franchisees' sales, are recognized monthly as
earned. Fees earned from franchises aggregated $2,340,000, $2,926,000 and
$3,397,000 during the years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company occasionally utilizes futures and option contracts with the
objective of minimizing fuel cost risk due to market fluctuations. Gains and
losses resulting from changes in the market value of these contracts are
recognized when the related inventory is sold. The Company also enters into
futures and options contracts that are not specific hedges and gains or losses
resulting from changes in market value of these types of futures contracts are
recognized in income currently.
Interest rate swap agreements are utilized from time to time to manage
interest rate exposures. The amount to be paid or received on these agreements
is accrued as interest rates change and is recognized over the lives of the
respective agreements.
INCOME TAXES
The Company is not subject to federal and state income taxes. Results of
operations are allocated to the partners in accordance with the provisions of
the Company's Partnership Agreement and reported by each partner on their
respective federal and state income tax returns. The taxable income or loss
allocated to the partners in any one year generally varies substantially from
income or loss for financial reporting purposes due to differences between the
periods in which such items are reported for financial reporting and income tax
purposes.
28
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEVELOPMENT COSTS/PREOPENING COSTS
The Company incurs costs associated with the development and opening of new
sites which are separately identifiable and incremental to normal operating
expenses. The costs are capitalized as incurred and are amortized against
income over a 12 month period following the opening of the location.
(3) INVENTORIES
The following is a summary of inventories at December 29, 1995 and December
31, 1996:
<TABLE>
<CAPTION>
1995 1996
------- --------
(IN THOUSANDS)
<S> <C> <C>
Motor fuels and lubricants $ 3,623 $ 5,074
Tires and tubes 3,568 2,993
Merchandise and accessories 7,783 7,531
Restaurant and other 1,345 726
Less reserve for obsolescence - (1,129)
------- -------
Total inventories $16,319 $15,195
======= =======
</TABLE>
In connection with new systems implemented in 1996, the Company identified
items that were excess or obsolete inventory. The criteria established is
merchandise in excess of a one year supply. The Company has established a
reserve for obsolete and excess inventory amounting to approximately $1.1
million. The related charge is included in cost of sales in the accompanying
1996 statement of operations.
(4) PROPERTY AND EQUIPMENT
Property and equipment is summarized at December 29, 1995 and December 31,
1996 as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES
(YEARS) 1995 1996
---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Land -- $ 34,872 $ 34,970
Buildings and improvements 30 91,644 94,244
Furniture and equipment 3-10 37,887 40,396
Leasehold improvements 7-30 20,066 20,238
Facilities under development -- 157 141
-------- --------
184,626 189,989
Less accumulated depreciation and 22,278 30,450
amortization -------- --------
Net property and equipment $162,348 $159,539
======== ========
</TABLE>
Facilities under development include costs associated with new facilities
and major renovations of existing facilities. There were no future construction
commitments at December 31, 1996.
(5) OPERATING LEASES
The Company is party to various operating leases. The operating leases are
for the lease of a Stopping Center location, office building, truck leases and
various equipment leases. The leases contain renewal options varying from
automatic annual renewals to three five-year options.
A summary of future minimum rental payments on operating leases which have
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1996, follows:
29
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(5) OPERATING LEASES (CONTINUED)
<TABLE>
<CAPTION>
RELATED
FISCAL YEAR ENDING PARTY OTHER TOTAL
- ------------------ -------- ----- --------
<S> <C> <C> <C>
(IN THOUSANDS)
--------------
1997 $ 1,494 $392 $ 1,886
1998 1,494 261 1,755
1999 1,422 41 1,463
2000 1,422 -- 1,422
2001 1,422 -- 1,422
Later years 4,663 -- 4,663
------- ---- -------
Total minimum lease payments $11,917 $694 $12,611
======= ==== =======
</TABLE>
Rent expense under all operating leases was $2,368,000, $2,004,000 and
$2,201,000 for the years ended December 30, 1994, December 29, 1995 and December
31, 1996, respectively. Of these rentals, $1,633,000 for 1994, $1,488,000 for
1995 and $1,487,000 for 1996, were paid to related parties of the Company.
(6) NOTES PAYABLE
Notes payable at December 29, 1995 and December 31, 1996 consisted of a
five-year revolving credit facility (the "Credit Facility") under which up to
$35,000,000 is available. The Credit Facility matures in June 1999. Interest is
paid monthly at 1.5% over the bank's prime rate or 2.75% over the Eurodollar
rate (the rate is determined at time of borrowing at the borrower option). The
Credit Facility is collateralized by substantially all of the Company's assets.
The balance outstanding on the Credit Facility was $20,578,000 and $21,639,000
as of December 29, 1995 and December 31, 1996, respectively, at an average
interest rate of 8.65% for 1995 and 8.8% for 1996. The rate was 8.8% at
December 31, 1996 (See Note 7).
The notes payable were refinanced subsequent to December 31, 1996 (See Note
17).
In addition, also outstanding at December 29, 1995 and December 31, 1996
under the Credit Facility were standby letters of credit principally related to
unfunded insurance claims in the amounts of $2,900,000 and $3,150,000
respectively, and various other standby letters of credit of approximately
$500,000.
30
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(7) LONG-TERM DEBT
Long-term debt at December 29, 1995 and December 31, 1996 is presented
below.
<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
--------------
<S> <C> <C>
Five-year term note to a bank in an
original amount of $25,000,000
maturing June 30, 1999. The note is
payable in 16 consecutive quarterly
installments varying from $600,000 to
$3,500,000 commencing June 30, 1995,
which aggregated $2,966,000 during
1996. Interest at either the bank's
prime rate plus 1.5% or the Eurodollar
rate plus 2.75% is payable monthly.
The rate was 8.68% at December 31,
1996. The note is collateralized by
substantially all of the Company's
assets. The notes were refinanced
subsequent to December 31, 1996 (See
Note 17). $ 22,760 $ 19,794
Seven-year term note to a bank in an
original amount of $25,000,000
maturing June 30, 2001. The note is
payable in 24 consecutive quarterly
installments varying from $400,000 to
$3,000,000 commencing June 30, 1995
which aggregated $739,000 during 1996.
Interest at either the bank's prime
rate plus 2% or the Eurodollar rate
plus 3.25% is payable monthly. The
effective rate was 9.1172% at December
31, 1996 as a result of an interest
swap agreement (the "Swap") with the
lender as required under the loan
agreement. The Swap expires on June
30, 1999. The note is collateralized
by substantially all of the Company's
assets. The notes were refinanced and
the swap extinguished subsequent to
December 31, 1996 (See Note 17). 23,749 23,010
12 1/2% Senior Notes due 2002 (the
"Notes") in an original aggregate
principal amount of $100,000,000, net
of original issue discount. Based on
the issue price of the Notes and
assuming the Warrants will be
exchanged for additional Notes, the
yield to maturity, determined by
semi-annual compounding of interest,
is approximately 13.25% per year.
Interest on the Notes is payable on
June 1 and December 1 of each year
beginning December 1, 1994. The notes
are not collateralized. Approximately
94% of the notes were repurchased
subsequent to December 31, 1996 (See
Note 17). 96,832 97,173
100,000 Exchangeable Debt Warrants, net
of original issue discount. The
Warrants will become exchangeable
during a 30-business day exchange
period following the first to occur of
(an "Exchange Event") (i) the
completion of an initial public
offering of common stock of a
corporation that succeeds to and
continues the business of the Company
(the "Successor Corporation"); (ii) a
Change of Control (as defined in the
Indenture for the Notes) or (iii) June
1, 1997. If the Exchange Event is a
Change of Control or June 1, 1997, the
Warrants will be exchangeable by the
holders thereof, for no additional
consideration, for $5,538,000
aggregate principle amount of
additional Notes. If the Exchange
Event is an initial public offering,
each Warrant will be exchangeable into
Notes as described above or into 3% of
the fully diluted shares of common
stock of the Successor Corporation.
Approximately 99% of the warrants were
redeemed subsequent to December 31,
1996 (See Note 17). 4,473 5,111
-------- --------
Total long-term debt 147,814 145,088
Less current portion 4,948 6,928
-------- --------
Long-term debt, excluding current
portion $142,866 $138,160
======== ========
</TABLE>
31
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(7) LONG-TERM DEBT (CONTINUED)
The Indenture for the Notes and the Credit Facility agreement each contain
certain covenants, including without limitation, covenants with respect to the
following matters: (i) limitation on indebtedness; (ii) limitation on restricted
payments; (iii) limitation on sales of restricted subsidiary stock; (iv)
limitation on transactions with affiliates; (v) limitation on liens; (vi)
limitation on disposition of proceeds of asset sales; (vii) limitation on
distributions and other payment restrictions affecting restricted subsidiaries;
(viii) restrictions on mergers and certain transfers of assets and (ix) in the
case of the Credit Facility financial covenants covering leverage, cash flows,
capital expenditures, fixed charge coverage, ratio of loans to appraised value
of the Company's travel plaza facilities and cumulative net income.
Estimated principal payment requirements on long-term debt prior to the
Recapitalization were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING (IN THOUSANDS)
--------------
<S> <C>
1997 $ 6,928
1998 7,000
1999 7,917
2000 8,908
2001 10,809
Thereafter 103,526
--------
Total $145,088
========
</TABLE>
In 1994, the Company incurred an extraordinary charge of $5,250,000 for
the write off of (i) the unamortized debt issuance costs associated with the
Company's prior revolving credit facility and certain mortgage notes payable to
various lenders and (ii) the prepayment premium paid in connection with the
repayment of certain of these facilities.
(8) ACCRUED EXPENSES AND OTHER LIABILITIES
The following is a summary of accrued expenses and other liabilities at
December 29, 1995 and December 31, 1996:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
--------------
<S> <C> <C>
Accrued expenses
Employee related expenses $ 5,174 $ 7,748
Taxes payable-sales, fuel and property 5,224 5,088
Other 2,306 4,497
Cash overdrafts 8,991 --
Due to franchisees 3,471 3,827
------- -------
$25,166 $21,160
======= =======
</TABLE>
(9) RELATED PARTY TRANSACTIONS
Amounts due to and from affiliates as of December 29, 1995 and December 31,
1996 consist of the following:
<TABLE>
<CAPTION>
1995 1996
---- ----
(IN THOUSANDS)
--------------
<S> <C> <C>
Due from affiliates:
C&R Distributing, Inc. $ 719 $ 1,370
Bordentown Junction Truck Stop 87 51
El Paso Tire Center - 10
Petro Truckstops, Inc. 378 336
Highway Service Ventures, Inc. - 35
Other 336 289
------- -------
$ 1,520 $ 2,091
======= =======
Due to affiliates:
Bordentown Junction Truck Stop $ 365 $ 394
El Paso Amusement Company 128 194
Highway Service Ventures, Inc. 1,309 1,524
C&R Distributing, Inc. 226 213
------- -------
$ 2,028 $ 2,325
======= =======
</TABLE>
32
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(9) RELATED PARTY TRANSACTIONS (CONTINUED)
Fuel and credit card receivable sales aggregating $4,301,000, $4,022,000
and $4,567,000 for the years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively, were made to C&R Distributing, Inc. ("C&R") at
the Company's cost. C&R sales of fuel and lubricants and truck hauling fees,
aggregating $5,547,000, $7,857,000 and $11,432,000 for the years ended
December 30, 1994, December 29, 1995 and December 31, 1996, respectively, were
charged to the Company.
As part of the organization of the Company in 1992, the Cardwell Group
negotiated rights to receive revenues (the "Coinage Arrangement") from certain
specified activities at 14 Stopping Centers (such as video games, pay telephone
services and rental of retail space). In 1994, the Coinage Arrangement was
terminated pursuant to the terms of the contracts establishing such arrangements
by payment of approximately $9,440,000 to the Cardwell Group; subsequent
revenues belong to the Company. The Cardwell Group received approximately
$988,000 for the year ended December 30, 1994 under the Coinage Arrangement.
Since June 1993, the two Stopping Centers located in Louisiana have
featured video poker games housed in a separate on-site facility and operated by
a third party, Petro Truckstops, Inc., an affiliate who, under terms of a
contract, turns over a specified portion of the revenue generated from the
machines. Petro Truckstops, Inc. pays 95% of revenue collected to the Company
and retains 5% for operating expenses in accordance with a lease agreement.
Payments to the Company under this arrangement aggregated $3,218,000 during
1994, $2,383,000 during 1995 and $1,979,000 during 1996. During 1996, Louisiana
enacted a statute requiring the cessation of video poker operations unless the
parish in which the operations were conducted voted to allow the continued
operation of video poker machines. On November 5, 1996, the parish in which the
Shreveport unit is located voted to continue to allow video poker operations,
while the parish in which the Hammond unit is located voted to disallow video
poker operations. The phase out period for the Hammond location is through June
1999. During the year ended December 31, 1996, the Hammond location generated
approximately $841,000 of revenue from video poker.
Management fees of $250,000 were earned by the Fremont Group for each of
the years ended December 30, 1994, December 29, 1995 and December 31, 1996, in
accordance with terms of the Company's Partnership Agreement.
Each of the affiliates identified in the table above, is owned or
controlled to some degree by a member or members of the Cardwell Group. Related
party transactions, other than those specifically discussed above, generally
arise in the ordinary course of business as a result of the Company's purchase
of trade accounts receivable or receipt of franchisee fees from certain related
parties who own properties which are part of the Company's network. All
significant related party transactions have been appropriately reflected in the
footnotes and accompanying consolidated financial statements.
(10) PARTNERS' CAPITAL
Under the terms of the Company's Partnership Agreement, the Company is
required to distribute to the partners, on a pro rata basis in accordance with
ownership percentage interests, an amount calculated based upon allocated
taxable income using certain state and federal tax rates. The payments are to
be made on or before the estimated tax payment dates, which are April 15, June
15, September 15 and December 15. Debt agreements restrict distributions upon
certain debt covenant violations.
As of December 31, 1996, the historical net book value of assets and
liabilities was approximately $32,000,000 greater than the associated net tax
basis of those assets and liabilities.
(11) EMPLOYEE BENEFITS
The Company sponsors a defined contribution retirement plan under Internal
Revenue Code Section 401(k) covering substantially all of its employees.
Company contributions equal 50% of the participants' contributions up to 2% of
the participants' annual salary and aggregated $115,484, $132,593
33
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(11) EMPLOYEE BENEFITS (CONTINUED)
and $138,000 for the years ended December 30, 1994, December 29, 1995 and
December 31, 1996, respectively.
(12) EMPLOYEE EQUITY PLAN
The company will establish an equity incentive plan to attract and retain
key personnel, including senior management, and to enhance their interest in the
Company's continued success. The Company anticipates that the aggregate equity
issued pursuant to such plans and any future plans will be between 5% and 10% of
the fully diluted equity of the Company.
(13) CONTINGENCIES
The Company is involved in various litigation incidental to the business
for which estimates of losses have been accrued, when appropriate. In the
opinion of management, such proceedings will not have a material adverse effect
on the consolidated financial position or results of operations.
(14) FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is presented in accordance with the requirements of SFAS No. 107.
The estimated fair value amounts have been determined by the Company using
available market information and valuation methodologies.
As of December 29, 1995 and December 31, 1996, the carrying amounts of
certain financial instruments employed by the Company, including cash, accounts
receivable, trade accounts payable and amounts due from/to affiliates are
representative of fair value because of the short-term maturity of these
instruments. The carrying amount of notes payable approximate fair value due to
the floating nature of the interest rate. The fair value of the long-term debt
has been estimated based on quoted market prices for the same or similar issues
or by discounting the future cash flows using rates currently available for debt
of similar terms and maturity. The fair value of all derivative financial
instruments is the amount at which they could be settled, based on quoted market
prices or estimates obtained from dealers. The following table reflects the
carrying amount and estimated fair value of the Company's financial instruments:
<TABLE>
<CAPTION>
YEAR ENDED,
1995 1996
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ----------- -------- ----------
Balance sheet financial instruments (in thousands)
<S> <C> <C> <C> <C>
Long-term debt $147,814 $145,509 $145,088 $142,825
Other financial instruments
Interest rate swap agreements - (1,220) - (535)
</TABLE>
Derivative Financial Instruments
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company uses
derivatives to manage well-defined interest rate and commodity price risks.
34
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(14) FINANCIAL INSTRUMENTS (CONTINUED)
1. Interest Rate Swap Agreements
At December 31, 1996, the Company was party to an interest rate
swap agreement with an aggregate notional principal amount of
$25,000,000. Under the agreement, the Company pays a fixed rate of
7.07% and receives a floating rate based on LIBOR on the aggregate
principal amount as determined in three month intervals. The
transaction effectively changes a portion of the Company's interest
rate exposure from a floating rate to a fixed rate basis. The effect
of the swap was to increase the rate by 1.07% which resulted in
additional interest expense of approximately $249,000. The swap was
extinguished subsequent to December 31, 1996.
The primary risks associated with swaps are the exposure to
movements in interest rates and the ability of the counterparties to
meet the terms of the contracts. Based on review and assessment of
counterparty risk, the Company does not anticipate non-performance by
the other party. The Company does not obtain collateral or other
security to support financial instruments subject to credit risk, but
monitors the credit standing of counterparties.
2. Futures Contracts
The Company occasionally utilizes futures and option contracts
with the objective of minimizing fuel cost risk due to market
fluctuations.. During 1994, the Company realized gains of
approximately $94,000 pertaining to futures contracts. There were no
contracts outstanding at December 29, 1995 and December 31, 1996.
(15) ENVIRONMENTAL MATTERS
The Company is subject to contingencies pursuant to environmental laws
and regulations that in the future may require the Company to take action to
correct the effects on the environment of prior disposal practices or releases
of chemical or petroleum substances by the Company or other parties. The
Company has accrued for certain environmental remediation activities consistent
with the policy set forth in Note 2. At December 31, 1996, such accrual
amounted to approximately $217,000 and, in management's opinion, was appropriate
based on existing facts and circumstances. Under the most adverse
circumstances, however, this potential liability could be significantly higher.
In the event that future remediation expenditures are in excess of amounts
accrued, management does not anticipate that they will have a material adverse
effect on the consolidated financial position or results of operations of the
Company. At December 31, 1996 the Company has recognized approximately $256,000
in the consolidated balance sheet related to recoveries of certain remediation
costs from third parties.
(16) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
--------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1995
Net revenues $125,948 $131,562 $137,384 $138,121
Operating income 6,711 6,817 7,184 4,161
Net income 1,554 1,446 1,908 (1,133)
</TABLE>
35
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(16) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter(a)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1996
Net revenues $147,925 $156,077 $160,530 $172,525
Operating income 4,655 5,924 6,216 (1,354)
Net income (loss) (675) 626 969 (9,680)
</TABLE>
- ---------------
(a) Fourth quarter of 1996 decline in operating income and net income is due
principally to the following items: (1) Earnings reflect the impact due to
lack of management direction and focus on the business during the change in
management structure that was in process as a result of the
Recapitalization and sale of the partnership interest. (2) In addition to
the decline in performance in the fourth quarter, the quarter also reflects
adjustments relating to establishment of inventory reserves, insurance
reserves, employee severance, benefit and placement expenses as well as
recapitalization costs amounting to approximately $1,400,000, $500,000,
$2,534,000, and $2,938,000 respectively. (See further discussion at Note
17).
(17) RECAPITALIZATION
On January 30, 1997, the Company consummated a transaction entered into in
October 1996, in which Chartwell, Mobil Long Haul and the Cardwell Group entered
into an agreement under which Chartwell and Mobil Long Haul invested $20.7
million and $15.0 million, respectively (the "Equity Investment"), in order to
directly acquire the partnership interests of the Company owned by the Fremont
Partners for approximately $25.6 million and invested approximately $10.1
million in the Company. The Cardwell Group maintained its capital investment in
the Company. Kirschner Investments ("Kirschner"), a Company franchisee,
invested $1.0 million in the Company (the "Kirschner Investment"). Following
the Equity Investment and the Kirschner Investment, the common partnership
interests of the Company are owned by Chartwell (approximately 50.8%), the
Cardwell Group (approximately 39.9%), Mobil Long Haul (approximately 7.4%), and
Kirschner (2.0%), and the preferred partnership interests are owned by Mobil
Long Haul ($12.0 million) and the Cardwell Group ($7.6 million). Chartwell and
the Cardwell Group own both general and limited partnership interests and Mobil
Long Haul and Kirschner own only limited partnership interests. Mobil Oil
Company and the Company also entered into certain supply and marketing
agreements.
As part of the Recapitalization, the Company issued $135 million of 10 1/2%
Senior unsecured notes due 2007, (the "New Notes") and repurchased approximately
94% of the Existing 12 1/2% Senior Notes due 2002 and approximately 99% of
outstanding Debt Warrants.
The Company also replaced its senior collateralized credit facility (the
"Existing Credit Agreement") with a new senior collateralized credit facility
(the "New Credit Agreement"). The New Credit Agreement consists of a $25.0
million revolving credit facility (the "Revolving Credit Facility"), a $14.0
million Term Loan A, a $30.0 million Term Loan B and a $40.0 million expansion
facility (the "Expansion Facility"). The New Credit Agreement is collateralized
by substantially all of the Company's assets and the partnership interests of
Mobil Long Haul and Chartwell and guaranteed by each of the Company's
subsidiaries, which guarantees in turn are collateralized by substantially all
of such subsidiaries' assets.
In the first quarter of 1997, the Company will recognize an extraordinary
charge of $13.5 million relating to amendment of the Existing Credit Agreement,
retirement of the Existing Notes and Debt Warrants and the write-off of deferred
financing costs.
36
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(17) RECAPITALIZATION (CONTINUED)
Aggregate yearly term loan principal payments under the New Credit
Agreement will be as follows: (i) $2.0 million in 1997; (ii) $3.0 million in
1998; (iii) $4.5 million in 1999; (iv) $5.5 million in 2000; (v) $7.5 million in
2001; (vi) $13.5 million in 2002; and (vii) $14.0 million in 2003.
During 1996, the Company recognized recapitalization costs of approximately
$2.9 million relating to professional fees associated with the Recapitalization.
The following Unaudited Condensed Pro Forma Consolidated Balance Sheet of
the Company as of December 31, 1996 is prepared to present the capitalization of
the Company as if the Recapitalization had occurred on that date (in thousands).
<TABLE>
<CAPTION>
December 31, December 31,
1996 Proforma 1996
Historical Adjustments Proforma(a)
------------ ----------- -------------
Assets (unaudited)
------
<S> <C> <C> <C>
Current assets:
Cash 3,182 15,592(e) 18,774
Other 29,091 -- 29,091
-------- -------- --------
Total current assets 32,273 15,592 47,865
Property and equipment, net 159,539 -- 159,539
Deferred debt issuance
and Company organization costs, net 11,305 5,373(c) 16,678
Other assets 5,983 - 5,983
-------- -------- --------
Total assets 209,100 20,965 230,065
======== ======== ========
Liabilities and Partners' Capital
---------------------------------
Total current liabilities 46,136 (5,934)(b) 40,202
Notes payable 21,639 (21,639)(b) -
Long-term debt, excluding current 138,160 50,879 (b) 189,039
portion -------- -------- --------
Total liabilities 205,935 23,306 229,241
Preferred partnership interest -- 19,600 (d) 19,600
Partners' Capital 3,165 (21,941) (18,776)
-------- -------- --------
Total liabilities and partners' $209,100 $ 20,965 $230,065
capital ======== ======== ========
</TABLE>
37
<PAGE>
Petro Stopping Centers, L.P.
Notes to Consolidated Financial Statements
(17) RECAPITALIZATION (CONTINUED)
Notes to Unaudited Condensed Pro Forma Consolidated Balance Sheet:
a) Pro forma as if the Recapitalization had occurred on December 31, 1996.
b) To reflect (i) the sale of the New Notes, net of repurchase of the Existing
Notes and Debt Warrants, including accretion to face amounts and premiums
and payment of accrued interest; (ii) replacement of the Existing Credit
Agreement with the New Credit Agreement and (iii) termination of the
existing interest rate swap agreement.
c) To reflect payment of new debt issuance costs reduced by write-off of
existing debt issuance costs.
d) To reflect assignment of mandatorily redeemable preferred partnership
interests of $19.6 million.
e) To reflect (in millions):
<TABLE>
<CAPTION>
<S> <C>
Sale of New Notes $ 135.0
Repurchase of Existing Notes and Debt
Warrants, Swap termination costs and
accrued interest (117.9)
Payment of debt issuance costs ( 12.6)
Capital contribution 11.1
-------
$ 15.6
=======
</TABLE>
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Control and Partners
Petro Stopping Centers, L.P.
We have audited the accompanying consolidated balance sheets of Petro Stopping
Centers, L.P. as of December 29, 1995 and December 31, 1996 and the related
consolidated statements of operations, changes in partners' capital and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Petro
Stopping Centers, L.P. as of December 29, 1995 and December 31, 1996 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
March 28, 1997
39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Control and Partners
Petro Stopping Centers, L.P.
Our report on the consolidated financial statements of Petro Stopping Centers,
L.P. is included on page 39 of this Form 10-K. In connection with our audit of
such consolidated financial statements, we have also audited the related
financial statement schedule listed in the index on page 54 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
March 28, 1997
40
<PAGE>
PETRO STOPPING CENTERS, L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Additions Amount
beginning charged to costs charged Balance at
of period and expenses off end of period
---------- ---------------- ------- -------------
(in thousands)
--------------
<S> <C> <C> <C> <C>
Year ended December 30, 1994
Allowance for doubtful accounts $1,020 $(351) $216 $453
====== ===== ==== ====
Year ended December 29, 1995
Allowance for doubtful accounts $ 453 $ 297 $142 $608
====== ===== ==== ====
Year ended December 31, 1996
Allowance for doubtful accounts $ 608 $ 215 $502 $321
====== ===== ==== ====
</TABLE>
41
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect to the persons who are
members of the Company's Board of Directors, Executive Committee, Operating
Committee and senior management team.
NAME AGE POSITION
---- --- --------
James A. Cardwell, Sr. 65 Chairman, Chief Executive Officer, President,
Member of the Executive Committee, Operating
Committee and Director
Larry Zine 42 Executive Vice President, Chief Financial
Officer and Member of Operating Committee
Evan Brudahl 41 Senior Vice President of Strategic Planning
and Development, of Operating Committee and
Director Member
James A. Cardwell, Jr. 37 Senior Vice President of Operations, Member of
Operating and Director Committee
Travis R. Roberts 61 Vice President of Real Estate Services and
Member of Operating Committee
David Latimer 38 Vice President of Petro:Lube
David A. Haug 36 Vice President of Finance and Treasurer
Todd R. Berman 39 Member of the Executive Committee and Director
Mark A. Skolnik 43 Member of the Executive Committee and Director
Michael S. Shein 33 Member of Operating Committee and Director
James A. (Jack) Cardwell, Sr. -- Jack Cardwell founded the Company in 1975
and has been serving as the Chief Executive Officer since May 1992 and has been
a member of the Board of Control since its formation in 1992. He is the Chairman
and President with responsibility for the Company's overall performance, while
defining Petro's image in the marketplace and identifying growth opportunities
and overseeing employee and customer retention. He served as the Chairman of the
National Association of Truck Stop Operators ("NATSO") in 1983 and 1984 and has
worked on various committees of NATSO since that time. He currently serves as a
trustee for Security Capital Pacific Trust (a New York Stock Exchange Company)
and is on the Board of Directors for The El Paso Electric Company. Jack Cardwell
is the father of Jim Cardwell.
Larry Zine -- Larry Zine was hired in December 1996 as Executive Vice
President and Chief Financial Officer and is responsible for all financial,
accounting, management information and insurance and benefit services for the
Company. Mr. Zine was the Executive Vice President and Chief Financial Officer
for The Circle K Corporation, the second largest chain of convenience stores in
the United States, from 1988 to 1996. Mr. Zine was an integral part of The
Circle K Corporation's reorganization from bankruptcy in July 1993, its initial
public offering in March 1995 and subsequent sale in June 1996. Mr. Zine had
worked for The Circle K Corporation for 15 years in various capacities including
the last eight years as Chief Financial Officer. Mr. Zine was educated at the
University of North Dakota and holds an M.S. degree in Accounting and a B.S.B.A.
in marketing.
Evan Brudahl -- Evan Brudahl, a Mobil Oil employee, is the Senior Vice
President of Strategic Planning and Development and a director. Mr. Brudahl is
responsible for strategic planning and development functions of the Company.
This includes overseeing field support services, advertising, human resources,
corporate planning and franchise operations. Mr. Brudahl was most recently the
Manager of U.S. Diesel Retail Marketing and Travel Center Business at Mobil Oil
and has worked for Mobil Oil for 19 years. He has held the positions of District
Manager, Manager of U.S. company-operated Gasoline Stations Operations,
Franchise Manager, and various other positions in U.S. Marketing and Accounting
areas. He received a B.B.A. in Marketing from the University of Wisconsin at
Whitewater.
42
<PAGE>
James A. (Jim) Cardwell, Jr. -- Jim Cardwell is Senior Vice President of
Operations and Marketing with responsibility for the Company's operations and
fuel purchasing. Mr. Cardwell has been involved with the Company full time for
14 years and has held various positions including profit center management and
was Vice President of Operations from 1986 to 1992. Prior to his current
position, he served as Vice President of National Sales and Promotions from June
1993 to January 1997. Mr. Cardwell studied Management and Finance at the
University of North Texas. Currently he serves on the board of NATSO, and is
Chairman of the Board of the NATSO Foundation. He is also a member of the Young
Presidents Organization. Jim Cardwell is the son of Jack Cardwell.
Travis Roberts -- Travis Roberts is Vice President of Real Estate Services.
Mr. Roberts manages support services related to maintenance at existing sites,
capital projects at existing sites, new site acquisition and construction,
franchisee support, and new site selection. Mr. Roberts served as Vice President
of Maintenance and Development. Mr. Roberts joined the Company at its inception
in 1975. He was Vice President of Development from 1985 to 1992.
David Latimer -- David Latimer has been serving as Vice President of
Petro:Lube since April 1995, prior to which he served as Vice President of
Operations from 1993 to 1995. Mr. Latimer joined the Company in 1983 and was
instrumental in the introduction and development of the Petro:Lube Express Truck
Service Center business. Mr. Latimer served for 4 years on the
Bridgestone/Firestone Dealer Board and is a current member of the Kelly
Springfield Advisory Council. Mr. Latimer also serves as the Company
representative to the National Tire Dealers and Retreaders Association and The
Maintenance Council.
David A. Haug -- David A. Haug is Vice President of Finance of the Company.
Prior to his current position he served as the Controller for the Company, a
position he held since April 1990. Prior to joining the Company he was an audit
manager with Lauterbach, Borschow and Company, Certified Public Accountants from
1982 to 1990. He received a B.A. in accounting from New Mexico State University
and is a Certified Public Accountant in the state of Texas.
Todd R. Berman -- Todd Berman is a director. Mr. Berman is the founder and
President of Chartwell Investments. Mr. Berman has served as Chairman of the
Board of Griffith Consumers Company, one of the nation's largest independent
distributors of heating oil and other petroleum products, since 1994; as
Chairman of SunPark, Inc., a major owner and operator of off-site airport
parking lots, since November 1995; and as Chairman of Carl King, Inc., the
leading operator of gas stations and convenience stores in the Delmarva
peninsula (Delaware, Maryland, Virginia), since 1994. Mr. Berman has been with
Chartwell or its predecessor since 1992. Mr. Berman received an A.B. from Brown
University and an M.B.A. from Columbia University Graduate School of Business.
Mark A. Skolnik -- Mark Skolnik is a director. Mr. Skolnik has served as
Manager of Mobil Oil's Domestic Heating Oil and Diesel Fuel business since 1994.
Prior to this role, Mr. Skolnik spent six years working for Mobil Oil in its
European operations, starting and developing product trading operations in
Germany, managing Mobil Oil's supply and product operations in the United
Kingdom, and finally managing Mobil Oil's European product and supply
operations. Mr. Skolnik obtained his B.S. from Union College in Electrical
Engineering in 1976 and his M.B.A. from The Wharton School at The University of
Pennsylvania in 1981.
Michael S. Shein -- Mr. Shein is a director. Mr. Shein, a managing director
and co-founder of Chartwell Investments, has been with Chartwell Investments or
its predecessor since 1992. Mr. Shein has been a director of Griffith Consumers
Company, one of the nation's largest independent distributors of heating oil and
other petroleum products, since December 1994; a director of SunPark, Inc., a
major owner and operator of off-site airport parking lots, since November 1995;
and a director of Carl King, Inc., the leading operator of gas stations and
convenience stores in the Delmarva Peninsula (Delaware, Maryland, Virginia),
since December 1994. He received a B.S. summa cum laude, from The Wharton School
at the University of Pennsylvania.
43
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table presents information concerning compensation paid for
services to the Company during 1994, 1995 and 1996 to the Chief Executive
Officer of the Company and the four other most highly paid executive officers
employed by the Company at the end of 1996, collectively, the "Named Executive
Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------ ----------------
Awards
Name and Other Annual Options All Other
Principal Position Year Salary Bonus Compensation (% Interest)(1) Compensation
- --------------------------- ------- -------- ------------ ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James A. Cardwell- 1996 $363,686 $ -0- $186,152(2)
Chief Executive 1995 363,685 259,850
Officer 1994 385,563 193,895 439,466
Joseph R. Schillaci- 1996(7) 274,189 - 10,586(3)
President & Chief 1995 272,602 30,000 2.90% 11,325
Operating Officer 1994 247,771 134,235 11,658
Walter A. Fitzgerald, Jr. 1996(7) 145,514 - 960
Vice President- 1995 128,133 20,000 .70 24,176(4)
Operations 1994(5) 36,923 15,000
James A. Cardwell, Jr.- 1996 107,882 - 1,179(6)
Vice President - 1995 101,642 10,000 1,500
National Sales and 1994 100,059 40,712 1,615
Promotions
David Latimer- 1996 123,296 - 2,767(6)
Vice President- 1995 117,491 20,000 .40 3,498
Lube Operations 1994 112,067 57,410 2,641
</TABLE>
__________________
(1) Options held by the Named Executive Officers in the Company, expressed as a
percent of the partnership equity. All of such options were terminated
upon consummation of the Transactions at no cost to the Company.
(2) Represents employer contributions to the Company's 401(k) Plan of $3,497,
$3,295 and $4,362 in 1996, 1995 and 1994, respectively, and life insurance
premiums paid by the Company for the benefit of Mr. Cardwell in the amounts
of $182,655, $256,555 and $434,804 in 1996, 1995 and 1994, respectively.
(3) Represents insurance premiums of $7,653, $7,653 and $7,388 paid by the
Company for the benefit of Mr. Schillaci in 1996, 1995 and 1994,
respectively, and $2,933, $3,672 and $4,270 of employer contributions to
the Company's 401(k) Plan for 1996, 1995 and 1994, respectively.
(4) Represents $23,663 of payments in connection with relocation expenses
incurred by Mr. Fitzgerald and $960 and $513 of employer contributions to
the Company's 401(k) Plan in 1996 and 1995 respectively.
(5) Employment with the Company commenced in 1994.
(6) Represents employer contributions to the Company's 401(k) Plan.
(7) Mr. Schillaci's and Mr. Fitzgerald's employment was terminated in 1997.
44
<PAGE>
INCENTIVE EQUITY PLANS
The Company will establish an equity incentive plan to attract and retain
key personnel, including senior management, and to enhance their interest in the
Company's continued success. The Company anticipates that the aggregate equity
issued pursuant to such plans and any future plans will be between 5% and 10% of
the fully diluted equity of the Company.
COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTORS
Members of the Board of Directors do not receive a salary or an annual
retainer from the Company for their services.
COMPENSATION COMMITTEE
The Company does not maintain a formal Compensation Committee. The Vice
President of Administration of the Company administers the compensation program
in conjunction with the Chief Executive Officer, the President and the Board of
Directors
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Jack Cardwell and Jim
Cardwell on the Closing Date and, effective December 16, 1996, entered into an
employment agreement with Mr. Zine. The employment agreements commenced on the
date of execution and expire on December 31, 1999. Under the employment
agreements, the annual base salaries of Jack Cardwell, Jim Cardwell and Mr. Zine
(the "Executives") are $362,700, $135,000 and $290,000, respectively, and are
subject to review and may be increased by the Company's Board of Directors (or
compensation committee, if one is elected). Jack Cardwell and Jim Cardwell are
also entitled to participate in any bonus plan approved by the Board of
Directors of the Company. Mr. Zine is eligible to receive an annual cash bonus,
based on parameters to be established by Jack Cardwell and Mr. Zine and approved
by the Board of Directors; provided, that Mr. Zine's bonus will not be less than
40% of his base salary for the calendar year ended December 31, 1997.
The Executives are also entitled to any other benefits generally available
to the senior management of the Company. In addition, as described under the
"Incentive Equity Plan," the Company intends to establish an incentive equity
plan for senior management of the Company. Pursuant to their employment
agreements, Jim Cardwell and Mr. Zine are entitled to participate in the equity
incentive plan. On the Closing Date, Mr. Zine received, under the incentive
equity plan, options to purchase (at an exercise price per share of
approximately $400,000 per 1%) 2.75% of the Company's common partnership
interests, on a fully diluted basis, or a stock appreciation instrument
equivalent.
If the Company terminates any of the employment agreements without cause or
because the officer has been incapacitated for three consecutive months, or the
Executive terminates his employment agreement for "good reason" (as defined in
each Employment Agreement), then the terminated officer will be entitled to
continue to receive his salary, plus certain benefits, for twelve months from
the date of the notice of termination. The employment agreements contain certain
customary nonsolicitation provisions upon termination of such agreements.
The Company and Joseph R. Schillaci, the Company's former President and
Chief Operating Officer, entered into and employment agreement dated as of
January 1, 1993 (the "Employment Agreement"). The Company terminated the
Employment Agreement at the Closing of the Transactions. Pursuant to the terms
of the Employment Agreement, at the Closing, the Company: (i) paid Mr. Schillaci
a lump sum of $300,000; and (ii) paid Mr. Schillaci for reasonable expenses in
connection with his relocation; and out-placement assistance.
45
<PAGE>
SECONDMENT LETTER AGREEMENT
The Company entered into an agreement with Mobil Oil providing for the
temporary secondment (or loan) of one of Mobil Oil's employees, Evan C. Brudahl,
to the Company. The period of secondment commenced upon the Closing Date and is
contemplated to continue until July 1, 2000, subject to certain termination
rights, including the right of Mobil Oil or the employee to terminate the
agreement in their discretion. Under the agreement, the Company has the right,
if the employee is performing at an unacceptable level, to terminate the
secondment period on 120 days' notice. During the secondment period, the loaned
employee will continue as an employee of Mobil Oil but will be under the day-to-
day supervision of the Company. The Company will be responsible for all
compensation, benefit and other expenses relating to the secondment of the
employee to the Company.
MANAGEMENT RETENTION PLAN
The Company entered into agreements with certain members of management
(including Walter Fitzgerald and David Latimer.) to secure promises from such
key executives to remain in the employ of the Company in the event of the
occurrence of a transaction after which the former partners held less than 50%
of the total ownership interest in the Company (a "Change in Ownership"). Under
the agreements, if an executive, if an executive (i) promises to remain in the
employ of the Company for 60 days after a Change in Ownership and is not offered
continuing employment with the Company after such 60-day period or (ii) is
terminated within six months of a Change of Ownership, such executive will be
eligible to receive a predetermined amount up to $150,000 in six equal monthly
installments and in some cases, up to $25,000 in relocation expenses.
EMPLOYEE BENEFITS PLANS
The Company sponsors a defined contribution retirement plan under Internal
Revenue Code Section 401(k) covering substantially all of its employees.
Company contributions equal 50% of the participants' contributions up to 2% of
the participants' annual salary and aggregated $115,484, $132,593 and $138,000
for the years ended December 30, 1994, December 29, 1995 and December 31, 1996,
respectively.
On December 19, 1996, the Company filed with the Internal Revenue Service
("IRS"), pursuant to IRS Rev. Proc. 94-62, a request for a compliance statement
with respect to the Petro Stopping Centers, L.P. 401(k) Plan (the "Plan"). The
compliance statement request relates to the Plan's failure (i) to allocate
participant forfeitures pursuant to the terms of the Plan and (ii) to correctly
apply the actual deferral percentage test and the actual contribution percentage
test (items (i) and (ii) hereafter collectively referred to as the "Operational
Defects"). The Operational Defects relate to Plan years 1990 through 1995. The
Company does not believe that the existence or resolution of the Operational
Defects are material to its business.
46
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's common partnership interests by each general partner,
each limited partner who owns more than 5% of the Company's common partnership
interests, each director who beneficially owns partnership interests, each
executive officer who beneficially owns partnership interests and all directors
and executive officers of the Company as a group. Except as set forth in the
footnotes to the table, each partner listed below has informed the Company that
such partner will have (i) sole voting and investment power with respect to such
partner's partnership interests, except to the extent that authority is shared
by spouses under applicable law and (ii) record and beneficial ownership with
respect to such partner's partnership interests.
<TABLE>
<CAPTION>
TYPE OF CLASS OF CAPITAL PERCENTAGE
NAMES INTEREST INTEREST CONTRIBUTION OF CLASS
- ----------------------------- --------------- -------- --------------- --------------
<S> <C> <C> <C> <C>
James A. Cardwell, Sr. General Partner Common $ 485,560(1) 1.1896%(2)
6080 Surety Drive Limited Partner Common 14,143,493(1) 34.6515(3)
El Paso, Texas 79905
Chartwell L.P.(4) General Partner Common 400,000 0.9800
c/o Maples & Calder Limited Partner Common 20,330,000 49.8085
Ugland House
P.O. Box 309
George Town, Grand Cayman
Cayman Islands (B.W.I.)
James A. Cardwell, Jr. Limited Partner Common 1,640,947(1) 4.0203(5)
6080 Surety Drive
El Paso, Texas 79905
Mobil Long Haul Inc. Limited Partner Common 3,000,000 7.3500
3225 Gallows Road
Fairfax, Virginia 22037
98.0000%
All directors and officers
as a group (10 persons) 39.8614%
</TABLE>
______________
(1) Represents the implied carryover value of the Cardwell Group in the Company
after the consummation of the Recapitalization. The Cardwell Group did not
receive or invest any cash in the Recapitalization. For purposes of the
Recapitalization, its partnership interests were given an implied value of
approximately $23.9 million, of which $7.6 million was the face value of
preferred partnership interests and approximately $16.3 million was the
implied value of common partnership interests. The value of the Cardwell
Group's partnership interests has been implied based on the partnership
interest purchase price paid and capital contributions to the Company made
by Chartwell and Mobil Long Haul in the Recapitalization.
(2) Represents partnership interests owned of record by Petro, Inc. Petro, Inc.
is a wholly owned subsidiary of Nevada Trio, Inc., a Nevada corporation,
which is a wholly owned subsidiary of Card Partners, L.P., a Texas limited
partnership of which Jack Cardwell and Mrs. Jack Cardwell are limited
partners and of which Texas Mec, Inc., a Texas corporation, is the general
partner. Jack Cardwell is the sole shareholder of Texas Mec, Inc.
Accordingly, Jack Cardwell may be deemed to have beneficial ownership of
the partnership interests owned by Petro, Inc.
47
<PAGE>
(3) Includes partnership interests owned of record by Petro, Inc. Petro, Inc.
is a wholly owned subsidiary of Nevada Trio, Inc., a Nevada corporation,
which is a wholly owned subsidiary of Card Partners, L.P., a Texas limited
partnership of which Jack Cardwell and Mrs. Jack Cardwell are limited
partners and of which Texas Mec, Inc., a Texas corporation, is the general
partner. Jack Cardwell is the sole shareholder of Texas Mec, Inc.
Accordingly, Jack Cardwell may be deemed to have beneficial ownership of
the partnership interests owned by Petro, Inc.
(4) Represents partnership interests owned of record by Petro Holdings GP Corp.
and Petro Holdings LP Corp. Petro Holdings GP Corp., a Delaware
corporation, is a wholly owned subsidiary of Petro Holdings LP Corp., which
is a wholly-owned subsidiary of Petro Holdings L.L.C., a Delaware limited
liability company. Chartwell L.P., a Cayman Islands limited partnership, is
the majority shareholder of Petro Holdings L.L.C. Todd R. Berman, who is a
Director and a member of the Executive Committee of the Company, is a
limited partner of Chartwell L.P. Michael S. Shein, who is a Director and a
member of the Operating Committee of the Company, is also a limited partner
of Chartwell L.P. Mr. Berman and Mr. Shein are the Managers of Petro
Holdings L.L.C. Concurrent with the Closing, an affiliate of CIBC Wood
Gundy Securities Corp., an Initial Purchaser in the Offering, and The First
National Bank of Boston, the Agent and a Lender under the New Credit
Agreement, became minority shareholders of Petro Holdings L.L.C.
(5) Includes partnership interests owned of record by JAJCO II, Inc. Jim
Cardwell is the sole shareholder of JAJCO II, Inc. and may be deemed to
have beneficial ownership of the partnership interest owned by JAJCO II,
Inc.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TAX REIMBURSEMENTS
The Restated Partnership Agreement requires the Company to make
distributions to each of its partners in an amount sufficient to allow each
partner to pay federal, state and local income taxes with respect to allocations
of taxable income to such partner by the Company. Historically, aggregate tax
distributions to the Company's partners were based on the Company's taxable
income. For the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, tax distributions made to the Company's partners were
$526,562, $326,236 and $0, respectively. Because tax distributions will in the
future be based on separate allocations of taxable income of the Company's
partners rather than the taxable income of the Company, the aggregate tax
distribution likely will increase by up to approximately $1.2 million per year.
Under certain circumstances, the Company's partners receiving tax distributions
with respect to allocations of taxable income under the Restated Partnership
Agreement will be obligated to repay the portion of such tax distribution that
exceeds the amount of a tax distribution that would have been made had tax
distributions been based on the Company's taxable income.
PRINCIPAL EXECUTIVE OFFICES
The office building in which the Company's principal executive offices are
located is owned by Jack Cardwell, the Chief Executive Officer and a Director of
the Company. The Company leases the entire building under a lease expiring on
December 31, 2005. Under the lease, the Company pays monthly rent totaling
$336,000 per year, as well as taxes, maintenance and other operating expenses.
For each of the fiscal years ended December 30, 1994, December 29, 1995 and
December 31, 1996, the Company made annual rental payments of $336,000.
EFFINGHAM, ILLINOIS STOPPING CENTER
The Stopping Center located in Effingham, Illinois is owned by Truck Stop
Property Owners, Inc. ("Truck Stop"), which is owned by Travis Roberts, who is a
current officer of the Company, and five former employees of the Company. Mr.
Roberts owns 22% of the stock of Truck Stop. The Company leases the Effingham
Center under a lease expiring in May 2006, which provides for adjustable rental
payments tied to interest rates (the "Basic Rent"), plus taxes and operating
expenses. The Company has three consecutive options to renew the lease for terms
of five years each at rental rates equal to the Basic Rent, plus certain
adjustments at the time of renewal. The Company also has a right of first
refusal to purchase the Stopping Center at a purchase price agreed upon between
Truck Stop and a third party. For the fiscal years ended
48
<PAGE>
December 30, 1994, December 29, 1995 and December 31, 1996, the Company made
rental payments to Truck Stop of $1,086,000, $1,086,000 and $1,080,000,
respectively.
BORDENTOWN STOPPING CENTER
The Stopping Center located in Bordentown, New Jersey is owned by an entity
(the "Bordentown Venture") in which Jack Cardwell held a 50% interest in 1994.
In May 1995, Jack Cardwell sold his interest in the Bordentown Venture to his
partner. The Bordentown location became a franchisee effective December 1995.
HIGHWAY SERVICE VENTURES, INC.
Highway Service Ventures, Inc. ("HSV"), a corporation in which Jack
Cardwell owns a 32.5% interest, operates four franchised Stopping Centers
located in Elkton, Maryland; Ruther Glen, Virginia; Florence, South Carolina;
and Carnesville, Georgia pursuant to franchise agreements with the Company. The
initial term of each of these franchise agreements is ten years and they are
automatically renewed for two five-year terms unless terminated by the
franchisee. The initial term of the Elkton, Maryland franchise agreement expired
in September 1995, but such term has been extended through June 1997. The
initial terms of the remaining three franchise agreements will expire in March
1998, February 2001 and January 2005, respectively. None of these franchise
agreements contain terms that are any more favorable to the franchisee than the
terms in any of the Company's other franchise agreements.
PETRO:TREAD
In May 1992, the Company leased a facility in El Paso, Texas from a trust,
in which Jack Cardwell is a 50% beneficiary, to operate the Company's retread
plant, which produces retread tires for sale at Stopping Centers (including
franchisees) and to others. The lease, which expired in October 1995, provided
for two consecutive renewal options for terms of five years each. The Company
exercised its first renewal option in October 1995 to renew the lease for five
years commencing November 1, 1995. The Company made lease payments of $66,000,
$67,000 and $72,000, respectively, for the fiscal years ended December 30, 1994,
December 29, 1995 and December 31, 1996. In addition, the Company sells retread
tires to El Paso Tire Center, Inc., a corporation in which Jack Cardwell owns
100%. Such sales amounted to $531,000, $288,000 and $153,000 in 1994, 1995 and
1996, respectively.
PRODUCT SERVICES AGREEMENT AND FUEL SALES AGREEMENT
The Company currently purchases Chevron branded gasoline and motor oils at
cost for five of its Auto Fuel Islands pursuant to a sales agreement with C&R
Distributing, Inc. ("C&R"), a corporation in which Jack Cardwell is the sole
shareholder. In addition, in May 1992, C&R and the Company entered into a
product services agreement terminating in 1999, under which C&R provides the
Company with fuel hauling and fuel pump maintenance and services within the El
Paso, Texas metropolitan area, if requested by the Company. The agreement
provides that C&R will charge the Company for these services at the lowest rates
charged by C&R for similar services and, in any event, at rates that will not
exceed rates available from unrelated parties providing similar services. During
fiscal years 1994, 1995 and 1996, the Company made payments to C&R under these
two agreements aggregating $5,547,000, $7,857,000 and $10,771,000, respectively.
Furthermore, the Company and C&R agreed to notify the other if either party had
petroleum products for sale with no obligation on either party to purchase any
portion of such products. During fiscal years 1994, 1995 and 1996, the Company
made sales to C&R under this agreement aggregating $4,301,000, $4,022,000 and
$3,950,000, respectively. The term of the agreements with C&R have been extended
through December 31, 2004. Notwithstanding the extension, the Company has the
option of not purchasing products or services from C&R if the Company can
purchase such products or services more economically from third parties.
49
<PAGE>
TRUCK LEASING AGREEMENTS
In May 1992, the Company leased seven trucks under agreements from C&R for
use in the Company's business. These agreements expired in December 1993 and
provided aggregate monthly rental payments of $11,930. In January 1994, the
Company replaced these agreements with two new agreements which expired in
January 1995. The new agreements provide for two consecutive one-year renewal
options but leave the monthly rental payments unchanged. The Company exercised
the first renewal option in January 1995. In this connection, the Company made
payments of $72,000 for the year ended December 29, 1995. In June 1995 the
Company terminated the lease agreement and purchased trucks from C&R to use at
the locations for an aggregate purchase price of $212,000.
OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT
In connection with the formation of the Company in May 1992 under an Option
and Right of First Refusal Agreement, Jack Cardwell and Jim Cardwell, officers
and members of the Board of Control of the Company, granted to the Company and
Roadside options, which expire in December 2006, to purchase certain properties
owned by the Cardwells that are located near or adjacent to the Company's
Stopping Centers located in Shreveport, Louisiana (7 acres subject to option),
Weatherford, Texas (34 acres), Beaumont, Texas (17 acres) and Oklahoma City,
Oklahoma (30 acres) (the "Option Properties"), and a right of first refusal on
each of the Option Properties. At the Closing of the Transactions, Roadside
assigned all of its rights under the Option and Right of First Refusal Agreement
to Mobil Long Haul, Holdings GP and Holdings LP. The price at which an Option
Property may be purchased will be equal to the fair market value of the property
when the option is exercised as determined by an appraisal.
ALCOHOL SALES AND SERVICING AGREEMENTS
In order to continue engaging in retail sales of beer, wine or wine coolers
at a limited number of its facilities after the formation of the Company in May
1992, the Company entered into agreements with CYMA Development Corporation
("CYMA"), C and PPR, Inc. ("C&PPR"), Petro Truckstops, Inc. ("Petro Truckstops")
and Petro Beverage, Inc., which collectively hold permits or licenses to sell
alcoholic beverages in the states of Louisiana, Texas and Oregon. Jack Cardwell,
Jim Cardwell and Mrs. Jack Cardwell own 60%, 30% and 10%, respectively, of the
stock of C&PPR. Jack Cardwell is the sole shareholder of CYMA and Jim Cardwell
is the sole shareholder of Petro Truckstops and Petro Beverage, Inc. The
agreements continue in effect until terminated by either party. Under the
agreements with CYMA and C&PPR, the Company agreed to operate the alcohol sales
business at these locations in exchange for 10% of the gross receipts generated
from alcoholic beverage sales, plus reimbursement of all operating expenses.
Under a similar agreement with Petro Truckstops, dated April 8, 1994, and Petro
Beverage, Inc., dated February 10, 1995, each of which has a one year initial
term and continues in effect until terminated by either party, the Company
receives 15% of gross receipts generated from alcoholic beverage sales. In each
of the agreements the net payments to the Company are approximately equal to the
gross profit received by the above entities.
MOTOR MEDIA ARRANGEMENTS
In connection with the formation of the Company in May 1992, Motor Media,
Inc., a company owned 100% by Jim Cardwell ("Motor Media"), entered into a five-
year agreement with the Company (the "Motor Media Agreement"), under which
Motor Media leases floor and wall space at all Stopping Centers operated by the
Company and sells space for in-store advertising to third parties. Under the
agreement, the Company and Motor Media are entitled to 25% and 75%,
respectively, of the gross revenues generated. Motor Media received $192,000,
$170,000 and $214,000, respectively before its selling, maintenance and
administrative expenses for the fiscal years ended December 30, 1994, December
29, 1995, and December 31, 1996, representing its share of the gross receipts
generated. Motor Media has entered into similar floor and wall space leases with
other truck stops nationwide. The Company and Motor Media have extended the term
of the Motor Media Agreement through April 2002.
50
<PAGE>
AMUSEMENT AND VIDEO POKER GAMES AGREEMENTS
Under an existing agreement (the "Amusement Agreement") between El Paso
Vending and Amusement Company ("EPAC"), of which Jack Cardwell and Jim Cardwell
own 99% and 1%, respectively, and the Company, EPAC furnishes video and other
games to four of the Company's Stopping Centers and services these games.
Pursuant to the Amusement Agreement, which expires in May 2002 or until earlier
terminated by either party, the Company paid 60% of the revenues generated by
the games to EPAC and retained the remaining 40%. Beginning November 1994, the
arrangement was modified to 50% to EPAC and 50% to the Company. Upon the
termination of the Coinage Arrangements discussed below, the Company amended the
Amusement Agreement to cause EPAC to contract directly with the Company to
furnish and service video and other games at an additional 12 Stopping Centers
that were covered by the Coinage Arrangements. Subsequent thereto, EPAC began
furnishing and servicing games at an additional five Stopping Centers under the
terms of the Amusement Agreement. EPAC received $1,680,000, $1,880,000 and
$2,021,000 in revenues, respectively, generated from the furnishing and
servicing games located at the Stopping Centers for the fiscal years ended
December 30, 1994, December 29, 1995 and December 31, 1996. Since June 1993, the
two Company-operated Stopping Centers located in Louisiana have featured video
poker games operated by a third party. Under the terms of agreements relating to
the operation of, and distribution of revenues derived from, the video poker
operations, the Company is entitled to a specified portion of the revenues of
each machine. Under these arrangements, the operator turns over a share of the
revenues to Petro Truckstops, a corporation in which Jim Cardwell is the sole
shareholder, which in turn forwards 95% of these revenues to the Company. The
Amusement Agreement has been amended to extend its term through May 2002.
FREMONT PARTNERS' ANNUAL FEE
Pursuant to the Company's former partnership agreement, the Fremont
Partners provided various services to the Company, including tax and legal
services, and paid the directors' fees for the outside members of the Company's
Board of Control. In consideration for these services, the partnership agreement
provided that the Fremont Partners were entitled to an annual management fee of
$250,000 per year. Upon Closing of the Transactions, the partnership agreement
was restated. Such services are no longer rendered by the Fremont Partners and
no further fees will be paid to the Fremont Partners.
INDEMNITY AGREEMENTS
In order to comply with applicable Internal Revenue Code and Treasury
Regulation provisions dealing with recourse debt, Jack Cardwell, Jim Cardwell,
Texas JIMCO, Inc., JAJCO, Inc., JAJCO II, Inc. and Arcadian Management
Corporation each entered into an indemnity agreement under which each has agreed
to indemnify the Company, the general partners and certain limited partners in
the event that the indemnified party is required to pay certain of the Company's
indebtedness after a default, acceleration by the creditor and exhaustion of any
collateral securing the credit facility. In May 1994, Jack Cardwell, Jim
Cardwell, Texas JIMCO, Inc., JAJCO, Inc., JAJCO II, Inc., and Arcadian
Management Corporation amended their original indemnity agreements in connection
with the May 1994 financing. No payments have been made under these agreements.
COINAGE ARRANGEMENTS
In connection with the formation of the Company in May 1992, Jack Cardwell
retained rights to receive revenues generated from the Coinage Arrangements at
14 Stopping Centers, including the right to 100% of the revenues generated from
leases to third parties of certain retail space (such as barber shops, shoeshine
and repair stands and jewelry stores), coin-operated devices such as pinball,
video and other games and the provision of pay telephone services through
arrangements with AT&T and other carriers. In connection with the 1994
Refinancing, the Company paid approximately $9,440,000 to Jack Cardwell for the
rights to receive revenues under the Coinage Agreements beginning May 1, 1994.
The amount of this payment was based on the formula contained in the original
contract.
51
<PAGE>
In connection with the Coinage Arrangements, Jack Cardwell had entered into
a joint venture agreement (the "Venture") with EPAC under which EPAC furnished
video and other games at 12 of the 14 Company-operated Stopping Centers that
were covered by the Coinage Arrangements and serviced these games. EPAC received
60% of the revenues from these games, while Jack Cardwell received 40% of the
revenues from the games. The Venture was terminated in connection with the 1994
Refinancing.
MOTOR FUELS FRANCHISE AGREEMENT
The Company and Mobil Oil have entered into a 10-year Motor Fuels Franchise
Agreement whereby the Company has agreed to purchase Mobil branded diesel fuel
and gasoline for sale and distribution under Mobil Oil's trademarks at the
Company-operated truckstops. The agreement requires the Company to purchase from
Mobil Oil certain minimum monthly and annual quantities of diesel fuel and
gasoline available at Mobil Oil's specified delivery terminals subject to
product availability and reductions by Mobil Oil under certain described
circumstances and subject to existing gasoline supply contractual obligations.
The agreement allows the Company to continue to negotiate for the purchase of
diesel fuel with third-party suppliers approved by Mobil Oil. If the Company is
able to obtain a lower diesel fuel price from a third-party supplier approved by
Mobil in a particular market area, the Company may request that Mobil Oil meet
such lower price or a portion of the diesel fuel requirements would be supplied
from such Mobil Oil approved third-party supplier, in which case Mobil Oil would
purchase the diesel fuel from the supplier and resell the product to the
Company. Any change in supply source, however, does not affect the Company's
requirement to purchase the annual minimum number of gallons from Mobil Oil
specified delivery terminals fixed by the agreement. The Company is also limited
to certain monthly maximum purchase quantities from each Mobil Oil specified
delivery terminal. Prices to be charged for Mobil Oil fuel to be sold to the
Company during the term are based on certain referenced prices plus or minus
discounts or premiums. Subject to certain adjustments based upon fuel
availability at specified Mobil Oil supply terminals, beginning with the
calendar year January 1, 1997, and each succeeding calendar year thereafter, to
the extent the Company purchases from Mobil Oil quantities of diesel fuel below
the minimum amount required by the agreement, the Company is required to pay
Mobil Oil a fee based on the shortfall.
MASTER SUPPLY CONTRACT FOR RESALE OF OILS AND GREASES
Mobil Oil and the Company have also entered into a 10-year supply agreement
whereby the Company will purchase and feature certain Mobil Delvac branded oils
and lubricants at the truckstop locations operated by the Company.
MARKETING SERVICES AGREEMENT
At the Closing of the Transactions, Mobil Oil and the Company entered into
a ten-year Marketing Services Agreement whereby Mobil Oil provides advice and
assistance to the Company on matters concerning the distribution and marketing
of fuels and petroleum products, including certain personnel support. In
connection therewith, the Company will pay to Mobil Oil an annual marketing
services fee of $300,000, payable in two semi-annual installments, and
additionally will pay or directly reimburse Mobil Oil for all costs of certain
personnel support, including salary compensation, benefits, travel and other
out-of-pocket expenses incurred by certain Mobil Oil employees in connection
with the Company's business.
JOINT PROJECT DEVELOPMENT AGREEMENT
Mobil Oil and the Company have entered into a letter of intent that
contemplates definitive agreements with respect to certain projects related to
the Company or negotiations in good faith with respect to items which do not by
their terms contemplate the execution of a definitive agreement, including: the
joint development of a truck stop payment card; an on-and-off site fleet billing
system for the Company's customers; and establishment of a joint products supply
company.
52
<PAGE>
SECONDMENT LETTER AGREEMENT
The Company have entered into an agreement with Mobil Oil providing for the
temporary secondment (or loan) of one of Mobil Oil's employees, Evan C. Brudahl,
to the Company. The period of secondment commenced upon the Closing of the
Transactions and is contemplated to continue until July 1, 2000 subject to
certain termination rights, including the right of Mobil Oil or the employee to
terminate the agreement in their discretion. Under the agreement, the Company
has the right, if the employee is performing at an unacceptable level, to
terminate the secondment period on 120 days' notice. During the secondment
period, the loaned employee will continue as an employee of Mobil Oil but will
be under the day-to-day supervision of the Company. The Company is responsible
for all compensation, benefit and other expenses relating to the secondment of
the employee to the Company.
CHARTWELL FINANCIAL ADVISORY AGREEMENT
The Company entered into an agreement with Chartwell Investments, providing
for the payment of fees and reimbursement of certain expenses to Chartwell
Investments for acting as financial advisor with respect to the Transactions,
including soliciting, structuring and arranging the financing of the
Transactions. The fees, totaling $2.9 million, equal to 1% of the total
capitalization of the Company plus 1/2 of 1% of the Expansion Facility and the
reimbursement of certain expenses, were paid at the Closing. Mr. Berman and Mr.
Shein are directors of the Company and are officers and directors of Chartwell
Investments.
CHARTWELL MANAGEMENT CONSULTING AGREEMENT
The Company has entered into a management consulting agreement with
Chartwell Investments pursuant to which Chartwell Investments will provide the
Company with certain management, advisory and consulting services for a fee of
$600,000 for each fiscal year of the Company during the term of the agreement,
with up to an additional $100,000 payable for each fiscal year, provided that
EBITDA is at least $45 million, plus reimbursement of certain expenses. The term
of the management consulting agreement is ten years commencing on the Closing
Date and is renewable for additional one year periods unless the Board of
Directors of the Company gives prior written notice of non-renewal to Chartwell
Investments. Mr. Berman and Mr. Shein are directors of the Company and are
officers and directors of Chartwell Investments.
53
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
1. Financial statements
The following consolidated financial statements of the Company are included in
Part II, Item 8 of this report:
Page
----
Consolidated Balance Sheets 22
Consolidated Statements of Operations 23
Consolidated Statements of Changes in Partners' Capital 24
Consolidated Statements of Cash Flows 25
Accounting Policies and Notes to Consolidated Financial
Statements 26
Report of Independent Accountants 39
2. Financial statement schedule and supplementary information
required to be submitted.
Report of Independent Accountants 40
Schedule II-Valuation and Qualifying Accounts 41
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the audited
consolidated financial statements or notes thereto.
3. Exhibits
Incorporated herein by reference is a list of Exhibits contained in the
Exhibit Index on pages 56 through 60 of this Annual Report.
(b) REPORTS ON FORM 8-K:
A Current Report on Form 8-K was filed by the Company on October 23,
1996, with respect to the proposed purchase of certain partnership
interests of the Company.
54
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Petro Stopping Centers, L.P. has duly caused this report
to be signed on its behalf by undersigned, thereunto duly authorized.
PETRO STOPPING CENTERS, L.P.
Registrant
By /s/ James A. Cardwell, Sr.
-------------------------------
James A. Cardwell, Sr.
Chairman of the Board of Directors and
Chief Executive Officer
April 10, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Petro
Stopping Centers, L.P. and in the capacities on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James A. Cardwell, Sr. Chairman of the Board of Directors , President and April 10, 1997
- --------------------------- Chief Executive Officer (Principal Executive Officer)
(James A. Cardwell, Sr.)
/s/ Larry J. Zine Executive Vice President, and April 10, 1997
- --------------------------- Chief Financial Officer (Principal Financial Officer)
(Larry J. Zine)
/s/ James A. Cardwell, Jr. Member of the Board of Directors and April 10, 1997
- --------------------------- Sr. Vice President of Operations
(James A. Cardwell, Jr.)
/s/ David A. Haug Vice President of Finance April 10, 1997
- --------------------------- and Chief Accounting Officer
(David A. Haug)
/s/ Evan Brudahl Member of the Board of Directors and April 10, 1997
- --------------------------- Sr. Vice President of Planning and Administration
(Evan Brudahl)
/s/ Todd R. Berman Member of the Board of Directors April 10, 1997
- ---------------------------
(Todd R. Berman)
/s/ Mark A. Skolnik Member of the Board of Directors April 10, 1997
- ---------------------------
(Mark A. Skolnik)
/s/ Michael S. Shein Member of the Board of Directors April 10, 1997
- ---------------------------
(Michael S. Shein)
</TABLE>
55
<PAGE>
PETRO STOPPING CENTERS, L.P.
EXHIBIT INDEX
3.1* Amended and Restated Certificate of Limited Partnership of the
Company dated as of January 30, 1997.
3.2* Third Amended and Restated Limited Partnership Agreement of the
Company, dated as of January 30, 1997, by and among the Petro, Inc.,
James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc.,
Petro Holdings GP Corp, Petro Holdings LP Corp., Mobil Long Haul
Inc. and Kirschner Investments.
3.3+ Certificate of Incorporation of Petro Financial Corporation.
3.4+ Bylaws of Petro Financial Corporation.
4.1++ Indenture, dated as of May 24, 1994, among the Company, Petro
Financial Corporation and First Trust National Association, as
trustee, for the Company's $100,000,000 principal amount 12 1/2%
Senior Notes due 2002.
4.2++ Form of 12 1/2% Senior Note due 2002.
4.3++ Guarantee Agreement, dated as of May 24, 1994, between the Company
and First Trust National Association.
4.4++ Warrant Agreement, dated as of May 24, 1994, among the Company,
Petro Financial Corporation and First Trust National Association.
4.5++ Specimen of Exchangeable Debt Warrant
4.6* Indenture dated as of January 30, 1997 among the Company, Petro
Financial Corporation and State Street Bank and Trust Company, as
trustee, relating to the Company's $135,000,000 principal amount 10
1/2% Senior Notes due 2007.
4.7* Form of 10 1/2% Senior Note due 2007.
4.8* Note Registration Rights Agreement, dated as of January 30, 1997, by
and among the Company, Petro Financial Corporation and CIBC Wood
Gundy Securities Corp. and Morgan Stanley Incorporated.
4.9* Amended and Restated Revolving Credit and Term Loan Agreement, dated
as of January 30, 1997, among the Company, the Lenders party
thereto, and The First National Bank of Boston, as Agent.
4.10* First Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement and Limited Waiver, dated as of February 12, 1997,
among the Company, the Lenders party thereto, and The First National
Bank of Boston, as Agent.
10.1+ Form of the Company's Franchise Agreement.
10.2* Schedule of Existing Franchise Agreements (including franchises in
which James A. Cardwell has an interest: Florence, SC; Elkton, MD;
Ruther Glen, VA; and Carnesville, GA).
10.3+ Surety Drive Lease Agreement, dated April 30, 1992, between James A.
Cardwell and the Company.
56
<PAGE>
10.4+ Agreement relating to trademark license for Bordentown, New
Jersey, dated April 30, 1992, between the Company and Petro, Inc.
10.5+ Petro:Tread Lease Agreement, dated April 30, 1992, between James
Arthur Lyle and the Company.
10.6+ Lease Agreement relating to Louisiana liquor sales, dated April
30, 1992, between the Company and Petro, Inc.
10.7+ Servicing Agreement relating to Louisiana liquor sales, dated
April 30, 1992, between the Company and Petro, Inc.
10.8+ Lease Agreement relating to Arlington, Texas liquor sales, dated
April 30, 1992, between the Company and CYMA Development
Corporation.
10.9+ Servicing Agreement relating to Arlington, Texas liquor sales,
dated April 30, 1992, between the Company and CYMA Development
Corporation.
10.10+ Lease Agreement relating to Texas convenience store liquor sales,
dated April 30, 1992, between the Company and C and PPR, Inc.
10.11+ Servicing Agreement relating to Texas convenience store liquor
sales, dated April 30, 1992, between the Company and C and PPR,
Inc.
10.12## Sublease and Services Agreement relating to Shreveport, Louisiana
liquor sales, dated April 8, 1994, between the Company and Petro
Truckstops, Inc.
10.13## Sublease and Services Agreement relating to Shorter, Alabama
liquor sales, dated April 13, 1994, between the Company and Petro,
Inc.
10.14+ Lease relating to the Effingham, Illinois Stopping Center, dated
May 23, 1990, between Truck Stop Property Owners, Inc. and Petro,
Inc.
10.15+ Lease with Option to Purchase, dated September 9, 1983, among
Vaughn O. Seale, Francine S. Dodson, Hazel S. Darouse and Metro
Hammond, Inc.
10.16+ Profit Participation Agreement, dated March 1, 1993, between
Pelican Gaming, Inc. and Petro Truckstops, Inc.
10.17## Amended and Restated Sublease and Services Agreement dated to be
effective as of February 26, 1993, between the Company and Petro
Truckstops, Inc.
10.18+ Agreement and General Release, dated February 22, 1993, among the
Company, Petro PSC Properties, L.P., Petro, Inc., Arcadian
Management Corporation and William J. La Croix.
10.19# Agreement relating to the purchase of Chevron brand and other
petroleum products of Chevron U.S.A. Products Company for the
Shorter, Alabama convenience store (facility no. 13929), between
the Company and C&R Distributing, Inc.
10.20# Agreement relating to the purchase of Chevron brand and other
petroleum products of Chevron U.S.A. Products Company for the
Bucksville, Alabama convenience store (facility no.13817), between
the Company and C&R Distributing, Inc.
57
<PAGE>
10.21# Agreement relating to the purchase of Chevron brand and other
petroleum products of Chevron U.S.A. Products Company for the
Kingston springs, Tennessee convenience store (facility no. 13928),
between the Company and C&R Distributing, Inc.
10.22# Agreement relating to the purchase of Chevron brand and other
petroleum products of Chevron U.S.A. Products Company for the
Vinton, Texas convenience store (facility no. 7-5661), between the
Company and C&R Distributing, Inc.
10.23# Agreement relating to the purchase of Chevron brand and other
petroleum products of Chevron U.S.A. Products Company for the El
Paso, Texas convenience store (facility no. 20-1602), between the
Company and C&R Distributing, Inc.
10.24* Distributor Sales Agreement (Branded) Renewal Offer dated November
1, 1996, between Exxon Company, U.S.A. and the Company.
10.25+ Split Dollar Life Insurance Agreement, dated May 7, 1993, among the
Company and James A. Cardwell, Jr. and Ellis O. Mayfield, Co-
Trustees of the Jack and Evonne Cardwell Trust Number Two dated
March 16, 1987.
10.26* Amended Split Dollar Life Insurance Agreement, dated as of May 1,
1995, among the Company, James A. Cardwell, Jr., Trustee of the
James A. and Evonne Cardwell Trust Number Two and James A. Cardwell,
Jr., Trustee of the James A. Cardwell Trust No. Three.
10.27. Lease and Services Agreement, dated January 26, 1995, between the
Company and Petro Truckstops, Inc.
10.28. Lease and Services Agreement, dated February 10, 1995, between the
Company and Petro Beverage, Inc.
10.29* Omnibus Agreement by and among the James A. Cardwell, Sr., James A.
Cardwell, Jr. JAJCO II, Petro Inc., Mobil Long Haul Inc., Petro
Holdings GP Corp., Petro Holdings LP Corp., the Company and
Kirschner Investments Company dated as of October 18, 1996 (the
"Omnibus Agreement").
10.30* Amendment No. 1 to the Omnibus Agreement, dated as of January 30,
1997.
10.31 Intentionally Deleted
10.32* Employment Agreement, dated January 30, 1997, by and between James
A. Cardwell, Sr. and the Company.**
10.33* Employment Agreement, dated January 30, 1997, by and between James
A. Cardwell, Jr. and the Company.**
10.34* Employment Agreement, dated December 16, 1996, by and between Larry
Zine and the Company.**
10.35* PMPA Distributor Motor Fuels Franchise Agreement, dated January 30,
1997, by and between Mobil Oil and the Company.
10.36* Marketing Services Agreement, dated January 30, 1997, by and between
Mobil Oil and the Company.
10.37* Memorandum of Understanding - Joint Project Development, dated
January 30, 1997, by and between Mobil Oil and the Company.
58
<PAGE>
10.38* Secondment Agreement, dated January 30, 1997, by and between Mobil
Oil and the Company
10.39* Master Supply Contract for Resale of Oils and Greases, dated
January 30, 1997, by and between Mobil Oil and the Company.
10.40* Financial Advisory Agreement, dated January 30, 1997, by and
between Chartwell Investment and the Company.
10.41* Management Consulting Agreement, dated January 30, 1997, by and
between Chartwell Investment and the Company.
10.42* Product Services Agreement, dated January 30, 1997, by and between
C&R Distributing, Inc., a Texas corporation,and the Company.
10.43* Petro/El Paso Amusement Services Agreement, dated January 30,
1997, by and between El Paso Vending and Amusement Company, a
Texas general partnership, and the Company.
10.44* Display Space Agreement, dated January 30, 1997, by and between
Motor Media, Inc., a Texas corporation, and the Company.
10.45* Second Amended and Restated Indemnity and Hold Harmless Agreement,
dated January 30, 1997, by James A. Cardwell, Sr. for the benefit
of Petro Holdings GP Corp., Petro, Inc., the Company and Petro
Financial Corporation.
10.46* Second Amended and Restated Indemnity and Hold Harmless Agreement,
dated January 30, 1997, by James A. Cardwell, Jr. and for the
benefit of Petro Holdings GP Corp., Petro, Inc., the Company and
Petro Financial Corporation.
10.47* Second Amended and Restated Indemnity and Hold Harmless Agreement,
dated January 30, 1997, by JAJCO II for the benefit of Petro
Holdings GP Corp., Petro, Inc., the Company and Petro Financial
Corporation.
10.48* Indemnity and Hold Harmless Agreement, dated January 30, 1997, by
Petro, Inc. for the benefit of Petro Holdings GP Corp., Petro,
Inc., the Company and Petro Financial Corporation.
10.49* Second Amended and Restated Indemnity and Hold Harmless Agreement,
dated January 30, 1997, by Arcadian Management Corporation, a
Colorado corporation, for the benefit of Petro Holdings GP Corp.,
Petro, Inc., the Company and Petro Financial Corporation.
10.50* Interest Purchase Agreement among Sequoia Ventures Inc., Roadside,
Inc., Chartwell, Mobil Long Haul and the Company dated as of
October 18, 1997.
10.51+ Southwestern Bell Telephone Company Multi-State License Agreement
for placement of Public Telephone Equipment, dated April 1, 1993,
between the Company and Southwestern Bell Telephone Company.
10.52+ Southwestern Bell Telephone Company Public Telephone License
Agreement, dated May 16, 1990, between Southwestern Bell Telephone
Company and Petro, Inc.
10.53.. Form of Key Employee Incentive Compensation Plan.**
10.54* 1996 Management Incentive Plan**
59
<PAGE>
12.. Statement of Computation of Financial Ratios.
21.* Subsidiaries of the Company.
27.* Financial Data Schedule
- -------------------------
* Filed herewith.
** Management contracts and compensatory plans, contracts or arrangements.
+ Incorporated by reference to the Company's Registration Statement on Form
S-1 (Registration No. 33-76154).
# Incorporated by reference to the Company's Amendment No. 1 to the
Registration Statement on Form S-1 (Registration No. 33-76514).
## Incorporated by reference to the Company's Amendment No. 2 to the
Registration Statement on Form S-1 (Registration No. 33-76154).
++ Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 30, 1994.
: Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 30, 1994.
. Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995.
.. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 29, 1995.
60
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF LIMITED PARTNERSHIP
OF
PETRO STOPPING CENTERS, L.P.
(Originally filed as PETRO PSC PROPERTIES, L.P.)
THIS Amended and Restated Certificate of Limited Partnership of Petro
Stopping Centers, L.P. (the "Partnership"), dated as of January 30, 1997, has
been duly executed and is being filed by the undersigned in accordance with the
provisions of 6 Del. C. (S)17-210, to amend and restate the original Certificate
-------
of Limited Partnership of the Partnership, which was filed on April 13, 1992,
with the Secretary of State of the State of Delaware, as heretofore amended (the
"Certificate"), to form a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. (S)17-101, et seq.).
------- -- ---
The Certificate is hereby amended and restated in its entirety to read as
follows:
1. Name. The name of the limited partnership formed and continued hereby
----
is Petro Stopping Centers, L.P.
2. Registered Office. The address of the registered office of the
-----------------
Partnership in the Sate of Delaware is: c/o National Registered Agents, Inc., 9
East Loockerman Street, Dover, Kent County, Delaware, 19904.
3. Registered Agent. The name and address of the registered agent for
----------------
service of process on the Partnership in the State of Delaware are: National
Registered Agents, Inc., 9 East Loockerman Street, Dover, Kent County, Delaware,
19904.
- 1 -
<PAGE>
4. General Partner. The names and the mailing addresses of the general
---------------
partners of the Partnership are:
1) Petro, Inc., 6080 Surety Drive, El Paso, Texas 79905.
2) Petro Holdings GP Corp., 717 Fifth Avenue, 23rd Floor, New York, New
York 10022.
IN WITNESS WHEREOF, the undersigned, constituting all of the general
partners of the Partnership, have executed this Amended and Restated Certificate
of Limited Partnership as of the date first-above written.
PETRO, INC.,
general partner
BY: /s/ James A. Cardwell
--------------------------
James A. Cardwell, Sr.
President
PETRO HOLDINGS GP CORP.,
general partner
BY: /s/ Michael S. Shein
--------------------------
Michael S. Shein
Vice President
- 2 -
<PAGE>
EXHIBIT 3.2
================================================================================
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY AND AMONG
PETRO, INC.
PETRO HOLDINGS GP CORP.
AND
JAMES A. CARDWELL, SR.
JAMES A. CARDWELL, JR.
JAJCO II, INC.
PETRO HOLDINGS LP CORP.
MOBIL LONG HAUL INC.
KIRSCHNER INVESTMENTS
DATED AS OF JANUARY 30, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS............................................... 3
1.1 Definitions............................................... 3
1.2 Interpretation............................................ 30
ARTICLE II GENERAL PROVISIONS........................................ 31
2.1 Partnership Name.......................................... 31
2.2 Purpose................................................... 31
2.3 Principal Place of Business............................... 31
2.4 Term...................................................... 32
2.5 Filings................................................... 32
2.5.1 Status............................................ 32
2.5.2 Dissolution....................................... 32
2.6 Limited Partner Powers.................................... 32
2.7 Specific Authorization of Documents....................... 33
2.8 Admission................................................. 33
ARTICLE III CAPITAL................................................... 34
3.1 Capital Contributions..................................... 34
3.1.1 General........................................... 34
3.1.2 Intentionally Deleted............................. 34
3.1.3 Capital Calls..................................... 34
3.1.4 Pre-Emptive Rights................................ 35
3.2 Other Matters............................................. 36
3.2.1 No Return of Capital.............................. 36
3.2.2 No General Partner Liability...................... 36
3.2.3 No Limited Partner Liability...................... 36
3.2.4 Kirschner Partner Conversion...................... 36
3.3 704(c) Distributions...................................... 37
3.4 Priority of Expenditures.................................. 38
3.4.1 First Priority.................................... 38
3.4.2 Second Priority................................... 38
3.4.3 Third Priority.................................... 38
3.4.4 Fourth Priority................................... 38
3.4.5 Fifth Priority.................................... 38
ARTICLE IV ALLOCATIONS............................................... 38
4.1 Profits................................................... 39
4.1.1 To Losses......................................... 39
4.1.2 To Preferred...................................... 39
4.1.3 To Common......................................... 39
4.2 Losses.................................................... 39
4.2.1 To Common......................................... 39
4.2.2 To Profits........................................ 39
4.2.3 To Common Unrecovered Capital..................... 40
4.2.4 To Preferred...................................... 40
4.2.5 Residual.......................................... 40
4.2.6 Limit............................................. 40
4.3 Special Allocations....................................... 40
4.3.1 Minimum Gain Chargeback........................... 40
4.3.2 Partner Nonrecourse Debt Minimum Gain
Chargeback........................................ 41
<PAGE>
Page
----
4.3.3 Qualified Income Offset........................... 42
4.3.4 Basis Adjustments................................. 43
4.3.5 Nonrecourse Deductions............................ 44
4.3.6 Partner Nonrecourse Deductions.................... 44
4.3.7 Allocation of Self-Charged Interest............... 44
4.3.8 Sharing of Excess Nonrecourse
Liabilities....................................... 44
4.4 Other Allocation Rules.................................... 44
4.4.1 Positive Basis Partners........................... 44
4.4.2 Timing............................................ 45
4.4.3 Method............................................ 45
4.5 Tax Allocations: Code Section 704(c)...................... 45
4.5.1 Section 704(c).................................... 45
4.5.2 Election.......................................... 46
4.6 Tax Matters Partner....................................... 46
4.6.1 Appointment....................................... 46
4.6.2 Elections......................................... 47
4.6.3 Miscellaneous..................................... 47
4.6.4 Reimbursement..................................... 48
ARTICLE V DISTRIBUTIONS............................................. 48
5.1 Distributions............................................. 48
5.1.1 Authority......................................... 48
5.1.2 Priority.......................................... 48
5.1.3 Adjustment........................................ 49
5.2 Minimum Tax Distributions................................. 50
5.3 Distribution to Limited Partners.......................... 51
5.4 Redemption of Preferred Partnership Interests............. 52
5.5 Limitation of Distributions............................... 52
ARTICLE VI MANAGEMENT................................................ 53
6.1 Board of Directors........................................ 53
6.1.1 Authority......................................... 53
6.1.2 Limitations on Authority.......................... 55
6.1.3 Duties and Obligations............................ 55
6.1.4 Composition....................................... 56
6.1.5 Term; Vacancies................................... 57
6.1.6 Voting............................................ 58
6.1.7 Deadlock.......................................... 58
6.2 Executive Committee....................................... 58
6.2.1 Authority......................................... 58
6.2.2 Composition....................................... 59
6.2.3 Voting............................................ 60
6.3 Operating Committee....................................... 60
6.3.1 Authority......................................... 60
6.3.2 Composition....................................... 60
6.4 Officers.................................................. 60
6.4.1 Chairman.......................................... 61
6.4.2 Chief Executive Officer........................... 61
6.4.3 President......................................... 61
(ii)
<PAGE>
Page
----
6.4.4 Executive Vice President and Chief
Financial Officer................................. 62
6.4.5 Senior Vice President of Strategic
Planning and Development.......................... 62
6.4.6 Senior Vice President of Operations............... 62
6.4.7 Vice President of Real Estate Services............ 63
6.4.8 Secretary......................................... 63
6.4.9 Limitation........................................ 63
6.4.10 Authority Generally............................... 64
6.5 Modifications to Control.................................. 64
6.5.1 Loan Default...................................... 64
6.5.2 EBITDA Control Remedy A........................... 64
6.5.3 EBITDA Control Remedy B........................... 64
6.5.4 Control Remedy C.................................. 65
6.5.5 No Limitation..................................... 65
6.6 Major Decisions........................................... 66
6.6.1 In General........................................ 66
6.6.2 Partner Veto Rights............................... 67
6.6.3 Additional Limitations on Actions of
the Partnership................................... 67
6.6.4 Voting............................................ 68
6.7 Right to Rely on Chairman or Secretary.................... 68
6.8 Meetings and Approval Requirements of Board of
Directors and Committees.................................. 69
6.8.1 Regular Meetings.................................. 69
6.8.2 Special Meetings.................................. 69
6.8.3 Telephonic Meetings............................... 69
6.8.4 Notices........................................... 69
6.8.5 Quorum............................................ 70
6.8.6 Approval Requirements............................. 70
6.8.7 Written Consents.................................. 70
ARTICLE VII LIABILITY AND INDEMNIFICATION............................. 71
7.1 General................................................... 71
7.2 Intentionally Deleted..................................... 72
7.3 Indemnification by Petro Partners......................... 72
7.4 Survival.................................................. 72
7.5 Indemnification Procedures................................ 72
7.5.1 Notice............................................ 72
7.5.2 Reimbursement..................................... 73
7.5.3 Defense by Indemnifying Parties................... 73
7.5.4 Defense by Indemnified Person..................... 74
7.5.5 Fees and Expenses................................. 75
7.5.6 Periodic Payments................................. 76
7.5.7 Intentionally Deleted............................. 77
7.5.8 Insurance......................................... 77
7.6 Liabilities in Exhibit D of the Participation
Agreement and Obligations................................. 78
7.7 No Personal Liability for Indemnification................. 79
(iii)
<PAGE>
Page
----
ARTICLE VIII AMENDMENTS................................................ 79
8.1 Amendments................................................ 79
ARTICLE IX ADMISSIONS; EXITS AND TRANSFERS........................... 80
9.1 Admission of Additional Limited Partners.................. 80
9.2 Restriction on Transfers by Partners...................... 80
9.2.1 General........................................... 80
9.2.2 Chartwell Transfers............................... 81
9.2.3 Cardwell Buy-Sell................................. 83
9.2.4 General Right of First Refusal.................... 88
9.2.5 Transfers to Affiliates........................... 91
9.2.6 Rights Upon Transfer.............................. 92
9.2.7 Change of Control Restriction..................... 92
9.3 Rights of Unadmitted Assignees............................ 93
9.4 Distributions and Allocations in Respect to
Transferred Interests..................................... 94
9.5 Employee Common Partnership Appreciation
Rights.................................................... 94
9.6 Termination of the Partnership............................ 95
ARTICLE X DISSOLUTION AND WINDING UP................................ 95
10.1 No Termination............................................ 95
10.2 Events of Dissolution..................................... 95
10.2.1 Expiration........................................ 96
10.2.2 Executive Committee............................... 96
10.2.3 Impossibility..................................... 96
10.2.4 General Partner Withdrawal........................ 96
10.2.5 Consent........................................... 96
10.2.6 Judicial Dissolution.............................. 97
10.3 Winding Up................................................ 97
10.3.1 To Creditors...................................... 97
10.3.2 To Partners....................................... 97
ARTICLE XI NONCOMPETITION AGREEMENT.................................. 98
11.1 Covenant Not to Compete................................... 98
11.1.1 Chartwell and Cardwell............................ 98
11.1.2 Mobil............................................. 99
11.1.3 Kirschner Non-Compete............................. 100
11.1.4 Reformation....................................... 101
11.2 Ownership in Publicly Traded Corporation.................. 101
ARTICLE XII CONVERSION TO CORPORATION................................. 102
12.1 Conversion to Corporation for Public Offering............. 102
12.1.1 Chartwell Partners Demand......................... 102
12.1.2 Opinion........................................... 102
12.1.3 Plan.............................................. 103
12.1.4 Alternative Structures............................ 104
12.1.5 Partner Securities Exchange....................... 104
12.1.6 Objection......................................... 105
12.1.7 Purchase.......................................... 106
(iv)
<PAGE>
Page
----
12.1.8 Security.......................................... 106
12.1.9 Assistance........................................ 107
12.1.10 Conversion Price.................................. 107
12.2 Registration Rights....................................... 108
12.2.1 Application....................................... 108
12.2.2 Piggyback Registration Rights..................... 108
12.2.3 Demand Registration Rights........................ 112
12.2.4 Registration Procedures........................... 115
12.2.5 Restrictions on Public Sale....................... 119
12.2.6 Registration Expenses............................. 120
12.2.7 Indemnification................................... 120
12.2.8 Rule 144.......................................... 123
12.2.9 Participation in Underwritten Registrations....... 124
ARTICLE XIII MISCELLANEOUS............................................. 124
13.1 Financial Reports......................................... 125
13.2 Binding Effect............................................ 125
13.3 Severability.............................................. 125
13.4 Governing Law............................................. 125
13.5 Not for Benefit of Creditors.............................. 125
13.6 Counterpart Execution..................................... 126
13.7 Sole and Absolute Discretion.............................. 126
13.8 FIRPTA.................................................... 126
13.9 Certificates.............................................. 128
SCHEDULES
---------
Schedule A - Capital Contributions and Sharing Percentages of the Partners
Schedule 2.6 - Affiliated Agreements
(v)
<PAGE>
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
------------------------------
THIS THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT is entered
into and shall be effective as of the 30th day of January, 1997 (the "Effective
Date"), by and among Petro, Inc., a Texas corporation, as a General Partner and
as a Limited Partner ("Petro"), Petro Holdings GP Corp., a Delaware corporation,
as a General Partner ("Holdings GP"), and James A. Cardwell, Sr. ("Cardwell,
Sr."), James A. Cardwell, Jr. ("Cardwell, Jr."), JAJCO II, Inc., a Delaware
corporation ("JAJCO II" and together with Cardwell, Sr., Cardwell, Jr. and
Petro, the "Cardwell Partners"), Petro Holdings LP Corp., a Delaware corporation
("Holdings LP"), Mobil Long Haul Inc., a Delaware corporation ("Mobil") and
Kirschner Investments, a Pennsylvania general partnership ("Kirschner"), as
Limited Partners, pursuant to the provisions of the Delaware Revised Uniform
Limited Partnership Act, with reference to the following recitals and on the
terms and conditions set forth in this Agreement.
RECITALS
--------
A. On or about April 13, 1992, Roadside and Petro, as general partners,
and Cardwell, Jr., as a limited partner, formed Petro PSC Properties, L.P., a
Delaware limited partnership, pursuant to the Limited Partnership Agreement of
the Partnership dated April 13, 1992 (the "Original Agreement").
B. Effective as of April 30, 1992, Roadside and Petro, as general
partners, and Fremont, Cardwell, Sr., Cardwell, Jr. and
<PAGE>
JAJCO II, as limited partners, amended and restated the Original Agreement by
entering into an Amended and Restated Limited Partnership Agreement of the
Partnership (the "First Amended Agreement"), together with Texas JIMCO, Inc., a
Texas corporation ("JIMCO"), JAJCO, Inc., an Ohio corporation ("JAJCO"), and
Arcadian Management Corporation, a Colorado corporation ("Arcadian"). The First
Amended Agreement was amended as of July 1, 1992, pursuant to an Amendment No. 1
to the Amended and Restated Limited Partnership Agreement of the Partnership.
The First Amended Agreement was further amended as of September 29, 1992,
pursuant to an Amendment No. 2 to the Amended and Restated Limited Partnership
Agreement of the Partnership. Effective as of January 1, 1994, the First
Amended Agreement was further amended pursuant to an Amendment No. 3 to the
Amended and Restated Limited Partnership Agreement of the Partnership.
Effective as of December 31, 1994, the First Amended Agreement was amended and
restated pursuant to a Second Amended and Restated Limited Partnership Agreement
of the Partnership (the "Second Amended Agreement"). Effective as of April 12,
1996, and pursuant to a Partnership Interest Purchase and Sale Agreement dated
April 12, 1996 and Consent and Waiver Agreement dated April 1, 1996, Fremont
Investors, Inc. transferred a .08% percentage interest in the Partnership to
Roadside and simultaneously such interest was converted from a limited partner
interest to a general partner interest in the Partnership; and, in addition,
after the foregoing transfer, Fremont sold and transferred to Sequoia the
remaining 44.17% percentage interest in the Partnership as a limited partner
interest in the Partnership. Subsequent to the
-2-
<PAGE>
foregoing transfers, Roadside owned a 1% general partner interest in the
Partnership and Sequoia owned a 44.17% limited partner interest in the
Partnership.
C. Pursuant to an Interest Purchase Agreement dated as of October 18,
1996 as supplemented, as the same may be amended, by and among Holdings GP,
Holdings LP, Mobil, Roadside, Sequoia and the Partnership (the "Interest
Purchase Agreement"), Roadside has sold 100% of its general partner interest in
the Partnership to Holdings GP and Sequoia has sold 100% of its limited partner
interests in the Partnership to Mobil and Holdings LP.
D. The Partners desire to amend and restate the Second Amended Agreement
in its entirety to reflect (i) the sale and transfer of the interests in the
Partnership of each of Roadside and Sequoia to Mobil, Holdings GP and Holdings
LP, (ii) the continuation of the business of the Partnership, (iii) the Sharing
Percentages of the Partners as a result of events described herein and (iv) such
other matters as are contained herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto hereby amend and restate in its entirety
the Second Amended Agreement and agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following terms have the
-----------
following meanings:
-3-
<PAGE>
1.1.1 "Act" means the Delaware Revised Uniform Limited Partnership
---
Act, as set forth in Title 6, Chapter 17 of the Delaware Code, as amended from
time to time (or any corresponding provisions of succeeding law).
1.1.2 "Adjusted Capital Account Balance" means, with respect to any
--------------------------------
Partner, the balance in such Partner's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Balance is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
1.1.3 "Adjusted Capital Account Deficit" shall mean, with respect
--------------------------------
to any Partner, a deficit (if any) in such Partner's Adjusted Capital Account
Balance.
1.1.4 "Advice" has the meaning set forth in Section 12.2.4.
------
1.1.5 "Affiliate" means, when used with reference to a specified
---------
Person,
-4-
<PAGE>
(a) any Person that directly or indirectly controls, is
controlled by or is under common control with the specified Person, or
(b) any Person that is a responsible employee of, an officer
of, a general partner in or a trustee of, or serves in a similar capacity with
respect to, the specified Person or any Person specified in clause (a) or of
which the specified Person or any Person described in clause (a) is a
responsible employee, officer, general partner or trustee, or with respect to
which the specified Person or any Person described in clause (a) serves in a
similar capacity. In the case of a Person who is an individual, Affiliate shall
include (x) any member of the immediate family of such Person, including the
spouse and lineal descendants and their spouses, of such immediate family
member, (y) any trust whose principal beneficiary is such Person or one or more
members of such immediate family, and (z) any Person controlled by such
individual's immediate family or any such trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
The First National Bank of Boston, Canadian Imperial Bank of Commerce and
their respective Affiliates shall not be deemed Affiliates of the Partnership or
the Chartwell Partners for any purposes of this Agreement.
1.1.6 "Agents" has the meaning set forth in Section 12.1.9.
------
-5-
<PAGE>
1.1.7 "Agreement" or "Partnership Agreement" means this Third
--------- ---------------------
Amended and Restated Agreement of Limited Partnership, as amended from time to
time.
1.1.8 "Amended and Restated Credit Agreement" means the Amended
-------------------------------------
and Restated Credit Agreement dated as of January 30, 1997, among the
Partnership, The First National Bank of Boston, as agent, and the lenders
signatory thereto.
1.1.9 "Applicable Tax Rate" means a tax rate used for computing
-------------------
Minimum Tax Distributions consisting of the sum of (i) the greater of the
individual or corporate maximum marginal income tax rate for federal income tax
purposes, plus (ii) a reasonable overall state and local income tax rate
established from time to time by the Executive Committee.
1.1.10 "Arcadian" means Arcadian Management Corporation, a Colorado
--------
corporation.
1.1.11 "Article" means an Article of this Agreement.
-------
1.1.12 "Available Cash" means, for a Fiscal Year or quarter, all
--------------
cash receipts of the Partnership during such period from all sources (including
amounts received as a result of any sale, exchange or other disposition, of all
or part of any Partnership asset; cash on hand at the beginning of such period
to the extent not held in reserves; proceeds of a financing or refinancing
giving rise to distributable net proceeds, recovery of a damage award or
insurance proceeds and any net reduction in the amount of reserves) less:
----
capital expenditures, repair or replacement of improvements, fixtures or
equipment; amounts used to pay or establish reserves for all Partnership
expenses and fees;
-6-
<PAGE>
Minimum Tax Distributions; debt payments including principal, premium and
interest, fees and expenses; maintenance capital improvements and contingencies;
and in the case of each such deduction, to the extent not funded by Capital
Contributions.
1.1.13 "Bechtel Partners" means Roadside and Sequoia.
----------------
1.1.14 "Board of Directors" has the meaning set forth in Section
------------------
6.1 prior to the consummation of an IPO Incorporation, and thereafter means the
Board of Directors of the Corporation.
1.1.15 "Book Depreciation" means for each Fiscal Year or part
-----------------
thereof, an amount equal to the depreciation, amortization or other cost
recovery deduction allowable for federal income tax purposes with respect to an
asset for such year or other period, except that if the Gross Asset Value of an
asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year, Book Depreciation shall be an amount which bears the
same ratio to such Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year bears to such
adjusted basis.
1.1.16 "Book Value" shall mean the Gross Asset Value computed for
----------
purposes of maintaining Capital Accounts hereunder. References to "Book
----
Purposes" shall be similarly interpreted.
- --------
1.1.17 "Business Day" means any day other than a Saturday, Sunday or
------------
a day on which national banking associations in the State of New York are
closed.
1.1.18 "Buy Option" has the meaning set forth in Section 9.2.3.
----------
-7-
<PAGE>
1.1.19 "Capital Account" means, with respect to any Partner, the
---------------
Capital Account maintained for such Partner in accordance with the following
provisions:
(a) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Partner's distributive share
of Net Profits and any items in the nature of income or gain which are specially
allocated pursuant to Article IV, and the amount of any Partnership liabilities
assumed by such Partner or which are secured by any property distributed to such
Partner;
(b) To each Partner's Capital Account there shall be debited
the amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement (other than Section 704(c)
Distributions), such Partner's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to Section
4.3 or Section 4.4 hereof, and the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any property contributed by
such Partner to the Partnership;
(c) In the event all or a portion of an interest in the
Partnership is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest in accordance with Section 9.4 hereof;
and
(d) In determining the amount of any liability for purposes
of subparagraph (a) and (b) of this definition, there
-8-
<PAGE>
shall be taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
The Capital Accounts of the Partners as of the Effective Date shall be
equal to the Capital Contributions of a Partner as of the Effective Date. The
foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Sections
1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Executive Committee
determines that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to comply with
such Regulations, the Executive Committee may make such modification, provided
that it is not likely to have a material effect on the amounts distributed to
any Partner upon the dissolution of the Partnership. The Executive Committee
also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the General Partners and the
Limited Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Sections 1.704-1(b) and 1.704-2.
1.1.20 "Capital Contributions" means, with respect to any General
---------------------
Partner or Limited Partner, the amount of money and the Gross Asset Value of any
property (other than money) contributed or
-9-
<PAGE>
deemed contributed to the Partnership with respect to the interest in the
Partnership held by such Partner pursuant to Article III. Capital Contributions
shall be designated as "Preferred Capital Contributions" or "Ordinary Capital
Contributions," as listed on Schedule A hereto. The Capital Contributions of
----------
the Partners as of the Effective Date are set forth on the initial Schedule A.
----------
1.1.21 "Capital Partners" shall mean all Partners that have
----------------
contributed capital to the Partnership.
1.1.22 "Cardwell Buy Price" has the meaning set forth in Section
------------------
9.2.
1.1.23 "Cardwell Buy-Sell Notice" has the meaning set forth in
------------------------
Section 9.2.
1.1.24 "Cardwell, Jr." means James A. Cardwell, Jr.
-------------
1.1.25 "Cardwell Partners" means Petro, JAJCO II, Cardwell, Sr. and
-----------------
Cardwell, Jr.
1.1.26 "Cardwell, Sr." means James A. Cardwell, Sr.
-------------
1.1.27 "Cardwell, Sr. Employment Agreement" means the Employment
----------------------------------
Agreement dated as of the date hereof by and between Cardwell, Sr. and the
Partnership.
1.1.28 "Certificate" has the meaning set forth in Section 2.4.
-----------
1.1.29 "Chairman" has the meaning set forth in Section 6.4.
--------
1.1.30 "Chartwell Partners" means Holdings GP and Holdings LP.
------------------
-10-
<PAGE>
1.1.31 "Code" means the United States Internal Revenue Code of 1986,
----
as amended from time to time (or any corresponding provisions of succeeding
law).
1.1.32 "Commission" shall mean the Securities and Exchange
----------
Commission.
1.1.33 "Common Partnership Interests" shall mean the partnership
----------------------------
interests owned by the Partners listed on Schedule A in respect of their
----------
Ordinary Capital Contributions.
1.1.34 "Common Stock" has the meaning set forth in Section 12.1.3.
------------
1.1.35 "Control Remedy A" means that the Board of Directors shall
----------------
review the limits of authority of the various committees and officers of the
Partnership and may change the same (other than the authority of the Chief
Executive Officer).
1.1.36 "Control Remedy B" means that the Board of Directors shall
----------------
have the right to require the replacement of any management personnel, including
but not limited to the Chief Executive Officer, but excluding the Chairman.
1.1.37 "Control Remedy C" means that (i) each member of the Board of
----------------
Directors and Executive Committee appointed by the Chartwell Partners shall have
such number of votes on any matter presented for consideration to such Board of
Directors and the Executive Committee such that such Chartwell Partner members
as a group would in the aggregate have a majority of the votes, (ii) the Board
of Directors shall have the right to appoint a majority of the members of the
Operating Committee, and (iii) the Board of
-11-
<PAGE>
Directors shall have the right to remove and replace the Chairman and/or the
Chief Executive Officer and/or President.
1.1.38 "Conversion Date" has the meaning set forth in Section 3.2.4.
---------------
1.1.39 "Corporation" has the meaning set forth in Section 12.1.1.
-----------
1.1.40 "Deadlock" has the meaning set forth in Section 6.1.7.
--------
1.1.41 "Demanding Group" has the meaning set forth in Section
---------------
12.2.3.
1.1.42 "Demand Registration" has the meaning set forth in Section
-------------------
12.2.3.
1.1.43 "Determination Date" has the meaning set forth in Section
------------------
13.8.
1.1.44 "Distributable Cash" has the meaning set forth in Section
------------------
5.1.2.
1.1.45 "EBITDA Actual Results" for any period means the amount equal
---------------------
to (a) the Net Income of the Partnership for such period, plus (b) the sum,
----
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Net Income), of (i) distributions, if any (whether
in cash or otherwise), paid or accrued during such period on any Partnership
Interests, (ii) the provision for income taxes for such period for the
Partnership, (iii) the consolidated interest expense of the Partnership for such
period, and (iv) the consolidated depreciation and amortization expenses of the
Partnership for such period; provided, however, that except to the extent
-------- -------
consented to in
-12-
<PAGE>
writing by all of the members of the Board of Directors, EBITDA Actual Results
shall not include any extraordinary or nonrecurring income or losses of the
Partnership, including but not limited to (1) gains or losses from the sale of
assets; (2) gains or losses associated with debt restructuring; (3) adjustments
to established reserves or accruals other than in the ordinary course of
business or (4) any changes from prior practice in the application of accounting
principles to the operations of the Partnership (excluding any NTI's for the
first twelve months of the Partnership's operations of such NTI). For purposes
of EBITDA Actual Results, the operations of the Partnership shall be calculated
on a consolidated basis with its subsidiaries.
1.1.46 "EBITDA Projections" means the EBITDA projections heretofore
------------------
delivered to The First National Bank of Boston, as agent under the Amended and
Restated Credit Agreement on October 9, 1996 in connection with the Amended and
Restated Credit Agreement, a copy of which shall be maintained in the minute
books of the Partnership. EBITDA Projections for each calendar quarter shall
equal the EBITDA Projections for the full Fiscal Year multiplied by percentages
for each quarter as follows:
First Quarter 24.5% Third Quarter 28%
Second Quarter 26.5% Fourth Quarter 21%
1.1.47 "Effective Date" means January 30, 1997.
--------------
1.1.48 "Entire Interests" has the meaning set forth in Section
----------------
9.2.3.
1.1.49 "Excess Minimum Tax Distribution" shall mean, for each
-------------------------------
Partner, an amount equal to the sum of the cumulative
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<PAGE>
amount of Minimum Tax Distributions to such Partner in respect of Net Profits
Allocations (made subsequent to December 31, 1996) with respect to the Common
Partnership Interests that are subsequently reversed by Losses (occurring
subsequent to December 31, 1996).
1.1.50 "Exchange Act" has the meaning set forth in Section 12.2.7.
------------
1.1.51 "Exculpated Party" has the meaning set forth in Section 7.1.
----------------
1.1.52 "Executive Committee" has the meaning set forth in Section
-------------------
6.2 prior to the consummation of an IPO Incorporation, and thereafter means the
Executive Committee of the Board of Directors of the Corporation.
1.1.53 "Expansion Capital Expenditures" has the meaning set forth in
------------------------------
Section 3.4.1.
1.1.54 "Fair Market Value" means the enterprise value of the
-----------------
Partnership, as agreed upon by all members of the Executive Committee, failing
which, the enterprise value of the Partnership as determined by an investment
banking firm selected by all members of the Executive Committee, and with
respect to a Partnership asset, the gross value of such asset as agreed upon by
the Board of Directors.
1.1.55 "First Amended Agreement" has the meaning set forth in
-----------------------
Recital B of this Agreement.
1.1.56 "Fiscal Year" means (i) the period commencing on the
-----------
Effective Date and ending on the Friday closest to December 31 of the same
calendar year and, and (ii) any subsequent twelve (12) month period commencing
on the next day following the last day of
-14-
<PAGE>
the previous Fiscal Year and ending on the Friday closest to December 31 of the
same calendar year.
1.1.57 "Fremont" means Fremont Investors, Inc., formerly known as
-------
Fremont Group, Inc. and, prior to such name, formerly known as Bechtel
Investments, Inc., a Nevada corporation.
1.1.58 "GAAP" means generally accepted accounting principles and
----
practices in effect in the United States of America from time to time.
1.1.59 "General Partners" means Holdings GP and Petro, as general
----------------
partners of the Partnership, and/or any Person who, at the time of reference
thereto, has been admitted to the Partnership, as a general partner of the
Partnership, and continues to act as a successor to the duties or interests of
such Persons, or as a replacement or additional general partner as provided
herein.
1.1.60 "Gross Asset Value" means, with respect to any Partnership
-----------------
property, such property's adjusted basis for U.S. Federal income tax purposes,
except as follows: that (i) the Gross Asset Value of Partnership property will
be adjusted to its Fair Market Value as of the Effective Date, (ii) whenever
such adjustment is required in order for allocations under this Agreement to
have "economic effect" within the meaning of Regulation Section 1.704-(b)(2)
(ii), and (iii) if the Board of Directors considers appropriate, whenever
such Adjustment to Fair Market Value is permitted under Regulation Section
1.704-1(b)(2)(ii). Gross Asset Value shall be adjusted by Book Depreciation
taken into account with respect to such asset for
-15-
<PAGE>
purposes of computing Profits or Losses, and other items allocated pursuant to
Section 4.3.
1.1.61 "Holder" has the meaning set forth in Section 12.2.1.
------
1.1.62 "Holdings GP" means Petro Holdings GP Corp., a Delaware
-----------
corporation.
1.1.63 "Holdings LP" means Petro Holdings LP Corp., a Delaware
-----------
corporation.
1.1.64 "Immediate Family Member" means natural or adoptive parent,
-----------------------
sibling, child or grandchild of a Person (or a trust or other entity for the
benefit of any of the foregoing provided such Person retains voting control of
such entity).
1.1.65 "Income Taxes" means all (i) net income and franchise taxes
------------
and withholding in respect thereof (including, without limitation, United States
federal income taxes), and any interest thereon and any penalties, additions to
tax or additional amounts applicable thereto, (ii) any amounts payable under the
Code or ERISA in respect of any Plan and any interest, penalties or excise taxes
thereon and (iii) any liability for the payment of any consolidated or combined
federal, foreign, state or local income taxes, and any interest thereon and any
penalties, additions to tax or additional amounts applicable thereto, that is
payable as a result of being a member of, and which may be imposed upon, any
affiliated group (as defined in Section 1504(a) of the Code or other applicable
law) of which any Petro Partner is a member (including in all cases any amount
payable as a result of any tax sharing agreement, policies or arrangements).
-16-
<PAGE>
1.1.66 "Indemnified Loss" means a Petro Indemnified Loss.
----------------
1.1.67 "Indemnified Parties" means the shareholders, subsidiaries,
-------------------
Affiliates, officers, directors, members, managers, employees and
representatives of an Indemnified Person, and the shareholders, subsidiaries,
officers, directors, members, managers, employees and representatives of such
shareholders, subsidiaries and Affiliates.
1.1.68 "Indemnified Person" means those Persons identified in either
------------------
Section 7.1, Section 7.2 or Section 7.3 as being entitled to receive the benefit
of the indemnity provided therein.
1.1.69 "Indemnified Stockholder" has the meaning set forth in
-----------------------
Section 12.2.7.
1.1.70 "Indemnifying Party" and "Indemnifying Parties" means the
------------------ --------------------
Person or Persons who have given indemnities hereunder.
1.1.71 "Interest Purchase Agreement" has the meaning set forth in
---------------------------
Recital C of this Agreement.
1.1.72 "IPO" means an initial public offering by the Corporation or
---
its successor of its equity interests.
1.1.73 "IPO Block Selling Partner" has the meaning set forth in
-------------------------
Section 12.1.6.
1.1.74 "IPO Incorporation" has the meaning set forth in Section
-----------------
12.1.
1.1.75 "JAJCO" means JAJCO, Inc., an Ohio corporation.
-----
1.1.76 "JAJCO II" means JAJCO II, Inc., a Delaware corporation.
--------
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<PAGE>
1.1.77 "JIMCO" means Texas JIMCO, Inc., a Texas corporation.
-----
1.1.78 "Kirschner" means Kirschner Investments, a Pennsylvania
---------
general partnership.
1.1.79 "Kirschner Conversion" has the meaning set forth in Section
--------------------
3.2.
1.1.80 "Limited Partner" means each of Holdings LP, Cardwell, Sr.,
---------------
Cardwell, Jr., JAJCO II, Petro, Mobil and Kirschner, and any Person who becomes
a Limited Partner pursuant to the terms of this Agreement.
1.1.81 "Liquidating Event" has the meaning set forth in Section
-----------------
10.2.
1.1.82 "Mailing" has the meaning set forth in Section 12.1.7 hereof.
-------
1.1.83 "Minimum Tax Distribution" means the distribution provided
------------------------
for in Section 5.1.2(a).
1.1.84 "Minimum Tax Distribution Carryforward" shall mean, with
-------------------------------------
respect to any Partner, the cumulative amount of such Partner's Excess Minimum
Tax Distributions to date less any Excess Minimum Tax Distributions previously
taken into account in determining the amount of Minimum Tax Distributions to
which such Partner is entitled pursuant to Section 5.2; provided, that to the
-------- ----
extent a Minimum Tax Distribution Carryforward of a Partner is applied to reduce
the amount of a Minimum Tax Distribution to said Partner, such reduction shall
be considered a Minimum Tax Distribution to such Partner for purposes of
determining future
-18-
<PAGE>
Minimum Tax Distributions to that Partner but shall not be considered a Section
704(c) Distribution.
1.1.85 "Mobil" means Mobil Long Haul Inc., a Delaware corporation,
-----
but for purposes of Article VI only, only for so long as Mobil Long Haul Inc. is
owned by Mobil Corporation or any direct or indirect subsidiary thereof or any
successor to a substantial portion of the domestic refining and marketing
operations of Mobil Oil Corporation.
1.1.86 "Net Income" for any period with respect to the Partnership
----------
means the net income (or loss) of the Partnership for such period, determined in
accordance with GAAP, excluding the net income (or loss) of any company acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition.
1.1.87 "Net Profits Allocation" shall mean an allocation of Profits
----------------------
that causes the cumulative amount of Profits allocated to such Partner to exceed
the cumulative amount of Losses allocated to such Partner. For this purpose,
Profits and Losses shall include all Section 704(c) Allocations reportable by a
Partner for federal income tax purposes.
1.1.88 "Non-Compete Period" shall mean five years after the sale of
------------------
all or substantially all the assets or equity securities of the Partnership or
the Corporation (except as to Section 11.1.2, as to which such period is 30 full
calendar months after such sale), and in all other instances, 2 years after a
Partner and its Affiliates cease to be direct or indirect equity owners of the
Partnership or the Corporation.
-19-
<PAGE>
1.1.89 "Nonrecourse Deductions" has the meaning set forth in
----------------------
Regulations Section 1.704-2(b)(1) and shall be determined according to the
provisions of Regulations Section 1.704-2(c).
1.1.90 "Nonrecourse Liability" has the meaning set forth in
---------------------
Regulations Section 1.752-1(a)(2).
1.1.91 "Notice" has the meaning set forth in Section 12.2.3.
------
1.1.92 "NTI" means any new location developed by the Partnership or
---
its subsidiaries after the date hereof, as of the date such location was first
placed in operation.
1.1.93 "Offering Amount" has the meaning set forth in Section 12.1.2
---------------
1.1.94 "Operating Committee" has the meaning set forth in Section
-------------------
6.3.
1.1.95 "Original Agreement" has the meaning set forth in Recital A
------------------
of this Agreement.
1.1.96 "Participation Agreement" means the Participation Agreement
-----------------------
dated as of April 30, 1992 entered into by and among the original partners of
the Partnership.
1.1.97 "Partner Nonrecourse Debt" has the meaning set forth in
------------------------
Regulations Section 1.704-2(b)(4).
1.1.98 "Partner Nonrecourse Debt Minimum Gain" has the meaning set
-------------------------------------
forth in Regulations Section 1.704-2(i)(2) and shall be determined in accordance
with Regulations Section 1.704-2(i)(3).
1.1.99 "Partner Nonrecourse Deductions" has the meaning set forth in
------------------------------
Regulations Section 1.704-2(i)(1) and shall be determined in accordance with
Regulations Section 1.704-2(i)(2).
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<PAGE>
1.1.100 "Partner Option Period" has the meaning set forth in Section
---------------------
9.2.4.
1.1.101 "Partners" means all General Partners and all Limited
--------
Partners, where no distinction is required by the context in which the term is
used herein. A Partner may be both a General Partner and a Limited Partner.
1.1.102 "Partnership" means Petro Stopping Centers, L.P., a Delaware
-----------
limited partnership.
1.1.103 "Partnership Interest" shall mean the partnership interests
--------------------
in the Partnership owned by the General and Limited Partners; provided, that,
-------- ----
for purposes of Sections 9.2.2 and 9.2.3 and Article 12, Partnership Interest
shall include, at the election of a transferring Partner, the equity interest of
the direct or indirect parent of such Partner provided that such parent and its
subsidiaries have no material assets or liabilities other than their Partnership
Interests and proper indemnities are provided to the acquiring Partner.
1.1.104 "Partnership Minimum Gain" has the meaning set forth in
------------------------
Regulations Section 1.704-2(b)(2) and shall be determined in accordance with
Regulations Section 1.704-2(d).
1.1.105 "Partnership Option Period" has the meaning set forth in
-------------------------
Section 9.2.4.
1.1.106 "Partner Veto Rights" has the meaning set forth in Section
-------------------
6.6.2.
1.1.107 "Person" means any individual, partnership, corporation,
------
limited liability company, association, business,
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<PAGE>
trust, government or political subdivision thereof, governmental agency or other
entity.
1.1.108 "Petro" means Petro, Inc., a Texas corporation, but only so
-----
long as at least 51% of Petro, Inc. is directly or indirectly beneficially owned
by Cardwell, Sr. or his Immediate Family Members and the management of Petro,
Inc. is directly or indirectly controlled by Cardwell, Sr. or his Immediate
Family Members.
1.1.109 "Petro Indemnified Loss" means any loss, liability, damage
----------------------
expense, including reasonable costs of investigation (other than any cost
attributable for investigation time by an employee of the Partnership or another
Indemnified Party) and all other expenses in respect of any matter hereafter
described, including reasonable attorneys' fees and expenses, sustained or
incurred by the Partnership or any Partner (or his or its Indemnified Parties)
of the Partnership who is not an Indemnifying Party with respect to such loss,
liability, damage or expense, arising out of or resulting from (i) any
inaccuracy in or breach of any of the representations, warranties or covenants
made by the Petro Partners in Sections 2.6, 2.9, 2.11, 2.19 and 2.22 of the
Participation Agreement, but only to the extent that any such obligation or
liability thereunder, if any, exists on the date hereof and survives the date of
this Agreement under applicable Federal and Delaware law; (ii) any liability or
obligation of the Petro Partners for Income Taxes as set forth in Article VIII
of the Participation Agreement, but only to the extent that any such liability
or obligation thereunder, if any, exists on the date
-22-
<PAGE>
hereof and survives the date of this Agreement under applicable Federal and
Delaware law; or (iii) any liability or obligation of the Petro Partners which
was expressly not assumed by the Partnership in the Participation Agreement, as
set forth in Exhibit D to the Participation Agreement. "Petro Indemnified Loss"
----------------------
also shall include all damages, loss (including but not limited to reduction in
and/or loss of value or ownership of property, inability to use any Partnership
property, or damages or loss as a result of inability to fulfill any Partnership
obligations under contracts and leases), injury, expense and cost, including
attorneys' fees and court costs, arising out of or resulting from the existence
and/or assertion of rights by any Person in respect of any of the following: (i)
that certain deed with respect to the Eloy, Arizona site recorded as instrument
029807 at Docket 1792, page 891 in the records of the recorder of Pinal County,
Arizona; (ii) Uniform Commercial Code financing statements by any Petro Partner
in favor of Mbank; and (iii) any liability or obligation of the Petro Partners
as set forth in Section 12.16 of the Participation Agreement, but only to the
extent that any such liability or obligation thereunder, if any, exists on the
date hereof and survives the date of this Agreement under applicable Federal and
Delaware law. For purposes of clause (i) in the preceding sentence, no
reduction in and/or loss of value, if any, shall be deemed to occur until such
time as the Partnership shall make a good faith effort to sell, exchange or
otherwise dispose of the Eloy, Arizona site or until the Partnership shall merge
or consolidate with any Person or sell all or substantially all of its
-23-
<PAGE>
assets to any Person. Notwithstanding any provision in this Agreement to the
contrary, the amount of a Petro Indemnified Loss shall be the actual loss,
liability, damage or expense sustained or incurred by the Partnership to the
extent ascertainable, irrespective of the number of different representations,
warranties or covenants violated in any of such agreements or otherwise.
1.1.110 "Petro Indemnifying Party" means an Indemnifying Party which
------------------------
is a Petro Partner. The Petro Partners shall be jointly and severally liable
with regard to all Petro Indemnified Losses, except that (i) JAJCO II and
Cardwell, Jr. shall be jointly and severally liable only for those Petro
Indemnified Losses which are principally related to or arise from the
businesses, assets and operations of JAJCO II (including the businesses, assets
and operations of JAJCO and JIMCO prior to their merger into JAJCO II) and
Cardwell, Jr., or any liabilities related thereto, and (ii) Arcadian's successor
in interest shall be liable only for those Petro Indemnified Losses which are
principally related to or arise from the business, assets and operations of
Arcadian, or any liabilities related thereto.
1.1.111 "Petro Partners" means Petro, Cardwell, Sr., Cardwell, Jr.
--------------
and JAJCO II.
1.1.112 "Piggyback Registration" has the meaning set forth in
----------------------
Section 12.2.2.
1.1.113 "Plan" has the meaning set forth in Section 12.1.3.
----
1.1.114 "Positive Basis" shall mean, with respect to any Preferred
--------------
Partnership Interest and as of any time of calculation,
-24-
<PAGE>
the excess of the amount to which such Partner is entitled to upon withdrawal
from or liquidation of the Partnership over such Partner's "adjusted tax basis"
in its Preferred Partnership Interest at such time (determined without regard to
any adjustments made to such adjusted tax basis by reason of any transfer or
assignment of such interest, including by reason of death); and "Positive Basis
Partner" shall mean any Partner whose Preferred Partnership Interest is redeemed
by the Partnership and who has Positive Basis as of the effective date of such
withdrawal.
1.1.115 "Preferred Partnership Interests" shall mean the partnership
-------------------------------
interests owned by the Partners listed on Schedule A in respect of their
----------
Preferred Capital Contributions.
1.1.116 "Preferred Return" means, with respect to a Preferred
----------------
Partnership Interest, an amount equal to: with respect to Mobil, nine and one
half percent (9.5%); and with respect to the Cardwell Partners and Kirschner,
eight percent (8%), in all cases per annum on an amount equal to the sum of such
Partner's Unrecovered Capital and any accrued but unpaid Preferred Return in
excess of the cumulative amounts distributed pursuant to Section 5.1.2(b), for
the actual number of days for which the Preferred Return is being determined,
cumulative and compounded semi-annually and based on the actual dates of
adjustments to Unrecovered Capital and Preferred Capital Contributions to and
Section 5.1.2(b) distributions from the Partnership.
1.1.117 "Preferred Stock" has the meaning set forth in Section
---------------
12.1.3.
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<PAGE>
1.1.118 "Profits" and "Losses" means, for each Fiscal Year, an
------- ------
amount equal to the Partnership's taxable income or loss for such Fiscal Year,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the Partnership that is exempt from U.S.
federal income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this Section shall be added to such taxable income or loss;
(b) Any expenditure of the Partnership that is
nondeductible for U.S. federal income tax purposes (including any expense
described in Code Section 705(a)(2)(B)) and is not otherwise taken into account
in computing Profits or Losses pursuant to this Section shall be subtracted from
such taxable income or loss;
(c) In the event the Gross Asset Value of the Property is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of the Property for purposes of computing Profits or
Losses ;
(d) Gain or loss resulting from the disposition of the
Partnership property shall be computed by reference to the Gross Asset Value of
the property, notwithstanding that the adjusted tax basis of the property
differs from its Gross Asset Value;
-26-
<PAGE>
(e) Notwithstanding any other provision of this Article,
any items which are specially allocated pursuant to Section 4.3 shall not be
taken into account in computing Profits or Losses; and
(f) Any difference between the Partnership's tax
depreciation or amortization deductions and Book Depreciation.
1.1.119 "Prospectus" shall mean the Prospectus included in any
----------
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
1.1.120 "Purchasing Partners" has the meaning set forth in Section
-------------------
12.1.6.
1.1.121 "Purpose" has the meaning set forth in Section 2.2.
-------
1.1.122 "Redemption Date" has the meaning set forth in Section 5.4.
---------------
1.1.123 "Registrable Securities" means the Common Stock, but with
----------------------
respect to any such Common Stock, only until such time as such stock (i) has
been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it or (ii) has been sold to
the public pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act or may be sold to the public pursuant to Rule 144(k) of the
Securities Act.
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<PAGE>
1.1.124 "Registration" has the meaning set forth in Section 12.2.4.
------------
1.1.125 "Registration Statement" means any registration statement of
----------------------
the Corporation filed pursuant to the Securities Act and which covers any of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus amendments and supplements to such Registration Statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such Registration Statement.
1.1.126 "Regulations" or "Treasury Regulations" means the Income Tax
----------- --------------------
Regulations, including Temporary Regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
1.1.127 "Removal" has the meaning set forth in Section 9.2.
-------
1.1.128 "Request" has the meaning set forth in Section 12.1.1.
-------
1.1.129 "Roadside" means Roadside, Inc., a Delaware corporation.
--------
1.1.130 "Second Amended Agreement" has the meaning set forth in
------------------------
Recital B of this Agreement.
1.1.131 "Section" means a Section of this Agreement.
-------
1.1.132 "Section 704(c) Allocations" has the meaning set forth in
--------------------------
Section 4.5.
1.1.133 "Section 704(c) Distributions" has the meaning set forth in
----------------------------
Section 5.2.
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<PAGE>
1.1.134 "Securities Act" means the Securities Act of 1933, as
--------------
amended.
1.1.135 "Selling Partner" has the meaning set forth in Section
---------------
9.2.4.
1.1.136 "Sell Option" has the meaning set forth in Section 9.2.3.
-----------
1.1.137 "Senior Officer" means any of the following officers of the
--------------
Partnership: Chief Executive Officer, President, Executive Vice President and
Chief Financial Officer, Senior Vice President of Strategic Planning and
Development, Senior Vice President of Operations, Vice President of Real Estate
Services.
1.1.138 "Sequoia" means Sequoia Ventures, Inc., a Delaware
-------
corporation.
1.1.139 "Shares" has the meaning set forth in Section 12.1.3 hereof.
------
1.1.140 "Sharing Percentage" shall mean (i) with respect to any
------------------
Preferred Partnership Interest held by a Partner, the Preferred Sharing
Percentage listed on Schedule A and (ii) with respect to any Common Partnership
----------
Interest held by a Partner, the Common Sharing Percentage listed on Schedule A.
----------
1.1.141 "Stockholder" shall mean any holder of Shares.
-----------
1.1.142 "Transfer" has the meaning set forth in Section 9.2.
--------
1.1.143 "Transfer Documents" has the meaning set forth in Section
------------------
9.2.6.
1.1.144 "Transfer Notice" has the meaning set forth in Section
---------------
9.2.4.
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<PAGE>
1.1.145 "Unrecovered Capital" shall mean: with respect to any
-------------------
Preferred Partnership Interest, an amount equal to (X) the Preferred Capital
Contributions plus Profits allocated under Section 4.1.1 in respect of such
Interest less (Y) the sum of (i) the aggregate amount of Losses allocated to
such Preferred Partnership Interest under Sections 4.2.2 and 4.2.4 and (ii)
distributions to such Partner in respect of such Preferred Partnership Interest
pursuant to Section 5.1.2(c) and (to the extent that Section 4.1.2 Profits
allocations have been reversed by Section 4.2.2 Losses) Section 5.1.2(b); and,
with respect to any Common Partnership Interest, an amount equal to (X) the
amount of Ordinary Capital Contributions plus Section 4.1.1 Profits allocations
in respect of such Common Partnership Interest less (Y) the sum of (i)
distributions to such Partner in respect of such Common Partnership Interest
pursuant to Section 5.1.2(a) (except to the extent such distribution is
characterized as a Section 704(c) Distribution), Section 5.1.2(c) and Section
5.1.2(d), and (ii) the cumulative amount of Losses allocated to such Common
Partnership Interest pursuant to Sections 4.2.3 and 4.2.5.
1.1.146 "U.S. Taxes Due" means with respect to any Fiscal Year or
--------------
part thereof of the Partnership after the date hereof, the estimated Income Tax
which each Partner would be required to pay if the Applicable Tax Rate applied
to the Net Profits Allocations to such Partner for such period.
1.2 Interpretation. Words such as "herein," "hereinafter," "hereof" and
--------------
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the
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<PAGE>
context otherwise requires. The singular shall include the plural and the
masculine gender shall include the feminine and neuter, and vice versa, unless
the context otherwise requires. "Includes" or "including" shall mean "including
without limitation." Unless otherwise defined, all accounting terms used herein
shall have the meaning thereof specified by GAAP.
ARTICLE II
GENERAL PROVISIONS
------------------
2.1 Partnership Name. The name of the Partnership shall be Petro
----------------
Stopping Centers, L.P., and all business of the Partnership shall be conducted
in such name, or under such other name as the Board of Directors deems
appropriate.
2.2 Purpose. The purpose of the Partnership (the "Purpose") is to
-------
participate in the operation, management, development, franchising and/or
ownership of truck stops and lubrication centers and certain businesses in
connection therewith, including but not limited to the sale of petroleum
products, sundry products, and services, and the operation of restaurants, and
to engage in any and all activities related to or at truck stops or in any
manner incidental to any of the foregoing, including the ownership of interests
in other Persons in furtherance thereof.
2.3 Principal Place of Business. The Partnership's principal place of
---------------------------
business shall be 6080 Surety Drive, in El Paso, Texas 79905. The Partnership's
principal place of business may be changed from time to time, and other offices
may be established from time to time, by the Board of Directors.
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<PAGE>
2.4 Term. The term of the Partnership commenced on the date the
----
certificate of limited partnership of the Partnership (the "Certificate") was
filed in the office of the Secretary of State of the State of Delaware in
accordance with the Act and shall continue until December 31, 2021, unless the
Partnership is earlier dissolved by operation of law or in accordance with the
provisions of Article X.
2.5 Filings.
-------
2.5.1 Status. The Board of Directors shall cause to be executed,
------
filed and published all such certificates, notices, statements and other
instruments and amendments thereto, and shall take any and all other actions,
under the laws of the State of Delaware and other applicable jurisdictions as it
may deem necessary or advisable to perfect and maintain the status of the
Partnership as a limited partnership under the laws of Delaware and any other
jurisdictions in which the Partnership engages in business.
2.5.2 Dissolution. Upon the dissolution and completion of winding
-----------
up of the Partnership, the Board of Directors shall promptly cause to be
executed and filed certificates of cancellation in accordance with the Act and
the laws of any other states or jurisdictions in which the Partnership has filed
certificates.
2.6 Limited Partner Powers. Each Limited Partner, any Affiliate thereof
----------------------
and any officer, director, shareholder, partner, employee, member, manager,
agent or representative of such Limited Partner or Affiliate may lend money to,
borrow money from, act as
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<PAGE>
a surety, guarantor or endorser for, guarantee or assume one or more specific
obligations of, provide collateral for, and transact other business with the
Partnership and others (including, without limitation, pursuant to the
agreements listed on Schedule 2.6 hereto and the transactions contemplated
------------
thereby) and, subject to other applicable law and subject to the terms of this
Agreement, has the same rights and obligations with respect thereto as a Person
who is not a Partner. The existence of these relationships and acting in such
capacities shall not result in a Limited Partner being deemed to be
participating in the control of the business of the Partnership or otherwise
affect the limited liability of the Limited Partner. If a Limited Partner or
any Affiliate thereof is a lender, in exercising its rights as a lender,
including making its decision on whether to foreclose on property of the
Partnership, such lender will have no duty to consider (i) its status as a
Partner or an Affiliate of a Partner, (ii) the interests of the Partnership, or
(iii) any duty it may have to any Partner or the Partnership.
2.7 Specific Authorization of Documents. The Partnership and each
-----------------------------------
General Partner or Senior Officer, on behalf of the Partnership, may enter into
and perform the agreements listed on Schedule 2.6 hereto and the transactions
------------
contemplated thereby without further act, vote or approval of any Partner
notwithstanding any other provision of this Agreement, the Act or other
applicable law, rule or regulation.
2.8 Admission. Mobil, Holdings LP and Kirschner are hereby admitted to
---------
the Partnership as, and Petro, Cardwell, Sr., Cardwell,
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<PAGE>
Jr., and JAJCO II shall continue to be, limited partners of the Partnership.
Holdings GP is hereby admitted to the Partnership as, and Petro shall continue
to be, a general partner of the Partnership.
ARTICLE III
CAPITALIZATION
--------------
3.1 Capital Contributions.
---------------------
3.1.1 General. The initial Schedule A attached hereto describes
------- ----------
the initial Preferred and Ordinary Capital Contributions of the Partners as of
the Effective Date and the relative Preferred and Common Sharing Percentages of
the Partners. Schedule A shall be updated from time to time to reflect
----------
additional Capital Contributions by the Partners and any changes to Sharing
Percentages.
3.1.2 Intentionally Deleted.
---------------------
3.1.3 Capital Calls. The Board of Directors may, by written
-------------
notice, request the holders of Common Partnership Interests to make such
additional Capital Contributions as the Board of Directors, in its sole
discretion, considers necessary or appropriate to fulfill the purposes of this
Agreement. Such additional Capital Contributions may, at the option of each
Partner, be made within thirty (30) days after receipt of written request from
the Board of Directors and shall be contributed by the Partners electing to
contribute in proportion to their respective Common Partnership Interests. The
provisions of this Section 3.1.3 are intended solely to benefit the Partners
and, to the fullest extent permitted by applicable law, shall not be construed
as
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<PAGE>
conferring any benefit upon any creditor of the Partnership (and no such
creditor shall be a third party beneficiary of this Agreement), and no Partner
shall have any duty or obligation to any creditor of the Partnership to make any
additional Capital Contributions or to cause the Board of Directors to request
additional Capital Contributions. If any Partner does not exercise its right to
maintain its proportionate percentage of the Common Sharing Percentages by
making an additional Capital Contribution pursuant to this Section 3.1.3, the
Common Sharing Percentages shall be adjusted based upon, and assuming the
Interests are sold based upon, Fair Market Value. Kirschner shall have the
right upon any call being made for a Capital Contribution to make additional
Capital Contributions (in an amount equal, on a pro rata basis, to additional
Capital Contributions being made by other Partners such that its Common Sharing
Percentage, assuming conversion of its Preferred Partnership into a Common
Partnership Interest shall remain at the same percentage as the percentage of
Common Partnership Interests (assuming conversion of the Preferred Partnership
Interest of Kirschner if then convertible) that Kirschner owned immediately
prior to such additional Capital Contribution).
3.1.4 Pre-Emptive Rights. Upon the admission of any new Partner
------------------
as a holder of Common Partnership Interests pursuant to Article IX, each holder
of Common Partnership Interests (and Kirschner, if it then owns Preferred
Partnership Interests which are then convertible into Common Partnership
Interests) shall have the right, but not the obligation, to make additional
Capital
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<PAGE>
Contributions in cash to the Partnership such that such Partner's percentage of
Common Partnership Interests (assuming in the case of Kirschner, conversion of
its Preferred Partnership Interests immediately prior thereto, if not previously
converted) immediately after such admission of a new Partner shall be the same
as immediately prior to such admission.
The Board of Directors shall provide each Partner not less than 30 days'
prior written notice of its rights hereunder, which rights shall expire as to
any Partner who has not exercised the same by written notice to the Company
given not less than 10 days prior to the date specified in the notice from the
Board of Directors as the date established for such Capital Contribution.
3.2 Other Matters.
-------------
3.2.1 No Return of Capital. Except as provided in Section 5.4 or
--------------------
Article IX, no Partner shall demand or receive a return of its Capital
Contributions or withdraw from the Partnership.
3.2.2 No General Partner Liability. No General Partner shall have
----------------------------
any personal liability for the repayment of any Capital Contributions of any
Limited Partner.
3.2.3 No Limited Partner Liability. The Limited Partners shall
----------------------------
not be personally liable for the debts, liabilities, contracts or other
obligations of the Partnership.
3.2.4 Kirschner Partner Conversion. The Kirschner Partner may at
----------------------------
any time before the fifth anniversary date of the Effective Date of the
Partnership (the "Conversion Date") elect to convert its Preferred Partnership
Interest to a Common Partnership
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<PAGE>
Interest representing a 2 percent Common Sharing Percentage as of the Effective
Date of the Partnership (the "Kirschner Conversion"). Upon the Kirschner
Conversion, all Preferred Returns on the Kirschner Preferred Partnership
Interest accrued prior to the Conversion Date shall cease to accrue any further
return, preferred or otherwise, and any such Preferred Return so accrued shall
be payable pro rata upon the payment of the Preferred Return to the other
holders of Preferred Partnership Interests. If an IPO Incorporation occurs, the
Kirschner Conversion will mandatorily occur immediately prior to the
consummation of the IPO.
3.3 704(c) Distributions. Any Section 704(c) Distribution made to a
--------------------
Partner pursuant to Section 5.2 herein, shall not bear interest and generally
shall be repaid by applying distributions otherwise payable to such Partner
pursuant to Section 5.1.2 (other than Minimum Tax Distributions) against such
advance. In addition, Section 704(c) Distributions shall be repaid to the
Partnership on: (a) an actual sale of all or substantially all of the
Partnership's assets; (b) upon an IPO Incorporation; and (c) upon the sale by
the Cardwell Partners of their interests in the Partnership. To the extent not
otherwise paid in cash, repayment as a result of an event described in the
preceding sentence shall be made by cancelling first a Partner's Preferred
Partnership Interest to the extent of any unpaid accrued Preferred Return and
any Unrecovered Capital and then cancelling a Partner's Common Partnership
Interest to the extent of any Unrecovered Capital. Any remaining balance shall
be paid to the Partnership by such Partner in cash.
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<PAGE>
3.4 Priority of Expenditures. Expenditures of the Partnership shall be
------------------------
paid in the following order of priority:
3.4.1 First Priority. First, to pay all operating expenses and
--------------
capital expenditures other than expenditures for NTIs and acquisitions of
existing facilities from third parties ("Expansion Capital Expenditures");
3.4.2 Second Priority. Second, to pay the Partnership's debt
---------------
service;
3.4.3 Third Priority. Third, to make Minimum Tax Distributions
--------------
and to pay fees to Partners and Affiliates of Partners; and
3.4.4 Fourth Priority. Fourth, to make Expansion Capital
---------------
Expenditures; provided, that, Expansion Capital Expenditures shall not be made
-------- ----
by the Partnership unless Partners holding Preferred Partnership Interests shall
have received distributions pursuant to Section 5.1.2(b) in an amount equal to
their Preferred Returns and any unpaid accrued Preferred Returns; provided,
--------
further, that, Expansion Capital Expenditures may be made by the Partnership to
- ------- ----
the extent such Preferred distributions are not permitted under the
Partnership's loan and financing agreements.
3.4.5 Fifth Priority. Fifth, to make any other distributions to
--------------
the Partners.
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<PAGE>
ARTICLE IV
ALLOCATIONS
-----------
4.1 Profits. After giving effect to the special allocations set forth in
-------
Section 4.3 hereof, Profits for any Fiscal Year shall be allocated:
4.1.1 To Losses. First, to those Partners to which Losses have
---------
previously been allocated, in reverse order of the allocations listed in Section
4.2 and to the extent of such Losses;
4.1.2 To Preferred. Next, among the Partners holding Preferred
------------
Partnership Interests in accordance with their Preferred Sharing Percentages,
until the cumulative amount of Profits allocated pursuant to this Section 4.1.2
is equal to the cumulative amount of cash distributed pursuant to Section
5.1.2(b); and
4.1.3 To Common. Thereafter, to the Partners in proportion to
---------
their Common Sharing Percentages.
4.2 Losses. After giving effect to the special allocations set forth in
------
Section 4.3, Losses for any Fiscal Year shall be allocated:
4.2.1 To Common. First, among the Partners in accordance with
---------
their Common Sharing Percentages, until the cumulative amount of Losses
allocated pursuant to this Section 4.2.1 is equal to the cumulative amount of
Profits allocated pursuant to Section 4.1.3;
4.2.2 To Profits. Next, to the Partners that received allocations
----------
of Profits pursuant to Section 4.1.2 to the extent of such Profits;
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<PAGE>
4.2.3 To Common Unrecovered Capital. Next, among the Partners in
-----------------------------
accordance with their Common Sharing Percentages, to the extent of their
Unrecovered Capital; and
4.2.4 To Preferred. Next, among the Partners in accordance with
------------
their Preferred Sharing Percentages, to the extent of their Unrecovered Capital;
and
4.2.5 Residual. Thereafter, among the Partners holding Common
--------
Partnership Interests in accordance with their Common Sharing Percentages.
4.2.6 Limit. The Losses allocated pursuant to this Section 4.2
-----
shall not exceed the maximum amount of Losses that can be so allocated without
causing or increasing an Adjusted Capital Account Deficit of any Limited Partner
at the end of any Fiscal Year. All Losses in excess of the limitations set
forth in this Section 4.2.6 shall be allocated to the General Partners in
proportion to their Common Sharing Percentages.
4.3 Special Allocations. The following special allocations shall be
-------------------
made:
4.3.1 Minimum Gain Chargeback. Notwithstanding anything to the
-----------------------
contrary in this Article 4, if there is a net decrease in Partnership Minimum
Gain (within the meaning of Regulations Section 1.704-2(d)) for a fiscal year,
then there shall be allocated to each Partner items of income and gain for that
year equal to that Partner's share of the net decrease in Partnership Minimum
Gain (within the meaning of Regulations Section 1.704-2(g)(2)), subject to the
exceptions set forth in Regulations Section 1.704-2(f)(2), (3), and (5);
provided, however, that if the
- -------- -------
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<PAGE>
Partnership has any discretion as to an exception set forth in Regulations
Section 1.704-2(f)(5), the Executive Committee may exercise such discretion on
behalf of the Partnership. The Executive Committee may, if the application of
this Partnership Minimum Gain chargeback requirement would cause a distortion in
the economic arrangement among the Partners, request the Commissioner of
Internal Revenue to waive the minimum gain chargeback requirement pursuant to
Regulations Section 1.704-2(f)(4). The items to be so allocated shall be
determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the
Regulations. The foregoing is intended to be a "minimum gain chargeback"
provision as described in Regulations Section 1.704-2(f)(1) and shall be
interpreted and applied in all respects in accordance with that Regulation.
4.3.2 Partner Nonrecourse Debt Minimum Gain Chargeback.
------------------------------------------------
Notwithstanding anything to the contrary in this Article 4 (other than Section
4.3.1 above), if during a fiscal year there is a net decrease in Partner
Nonrecourse Debt Minimum Gain (as determined in accordance with Regulations
Section 1.704-2(i)(3)), then, in addition to the amounts, if any, allocated
pursuant to Section 4.3.1, any Partner with a share of that Partner Nonrecourse
Debt Minimum Gain (determined in accordance with Regulations Section 1.704-
2(i)(5)) as of the beginning of the Fiscal Year shall, subject to the exceptions
set forth in Regulations Section 1.704-2(i)(4), be allocated items of income and
gain for that year (and, if necessary, for succeeding Fiscal Years) equal to
that Partner's share of the net decrease in the Partner
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<PAGE>
Nonrecourse Debt Minimum Gain. The Executive Committee may, if the application
of this Partner Nonrecourse Debt Minimum Gain chargeback requirement would cause
a distortion in the economic arrangement among the Partners, request the
Commissioner of the Internal Revenue to waive the minimum gain chargeback
requirement pursuant to Regulations Sections 1.704-2(f)(4) and 1.704-2(i)(4).
The foregoing is intended to be the "chargeback of partner nonrecourse debt
minimum gain" required by Regulations Section 1.704-2(i)(4) and shall be
interpreted and applied in all respects in accordance with that Regulation.
4.3.3 Qualified Income Offset. If any Partner unexpectedly
-----------------------
receives any adjustment, allocation or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for such year) shall be specially allocated to
such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible. An allocation pursuant to the foregoing
sentence shall be made only if and to the extent that such Partner would have an
Adjusted Capital Account Deficit after all other allocations provided for in
Article IV have been tentatively made. This allocation is intended to
constitute a "qualified income offset" within the meaning of Regulations
Sections 1.704-1(b)(2)(ii)(d)(3) and shall be construed in accordance with the
requirements thereof. An item of loss, deduction or Section 705(a)(2)(B)
expenditure shall not be
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<PAGE>
allocated to a Partner to the extent that, as of the end of any taxable year,
such allocation would create or increase an Adjusted Capital Account Deficit for
such Partner. Any amount that cannot be allocated to a Partner by reason of the
foregoing sentence shall be allocated to other Partners (except to the extent
that such allocation to any other Partner would also be limited under the
foregoing sentence). If allocations to all Partners would be so limited, such
amount shall be allocated to the General Partners.
4.3.4 Basis Adjustments. To the extent an adjustment to the
-----------------
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required under Regulation Section 1.704-1(b)(2)(iv)(m) to
be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations;
provided, however, in the event that an adjustment to the Book Value of
- -------- -------
Partnership property is made as a result of an adjustment pursuant to Section
734(b) of the Code, items of income, gain, loss or deduction, as computed for
book and tax purposes, shall be specially allocated among the Partners so that
the effect of any such adjustment shall benefit (or be borne by) the Partner(s)
receiving the distribution which caused such adjustment.
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<PAGE>
4.3.5 Nonrecourse Deductions. Nonrecourse Deductions for any
----------------------
Partnership Fiscal Year or other period shall be allocated among the Partners in
accordance with their Common Sharing Percentages.
4.3.6 Partner Nonrecourse Deductions. Partner Nonrecourse
------------------------------
Deductions for any Partnership Fiscal Year or other period shall be specially
allocated to the Partner who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
4.3.7 Allocation of Self-Charged Interest. If a Partner makes a
-----------------------------------
loan to the Partnership, to the extent permitted under Regulations Section
1.469-7, the Partnership shall allocate to such Partner any interest deduction
specifically incurred by the Partnership as a result of such loan; provided,
--------
however, that this Section 4.3.7 shall not affect the amount of income or loss
- -------
otherwise allocable to such Partner.
4.3.8 Sharing of Excess Nonrecourse Liabilities. Excess
-----------------------------------------
nonrecourse liabilities, as defined in Regulations Section 1.752-3(a)(3), shall
be shared by the Partners holding Common Partnership Interests in accordance
with their respective Common Sharing Percentages.
4.4 Other Allocation Rules.
----------------------
4.4.1 Positive Basis Partners. Allocations of items of gross
-----------------------
income shall be made to Positive Basis Partners to the extent of any such
Partners' Positive Basis as of the date of withdrawal from the Partnership or
liquidation of such Partnership Interest.
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<PAGE>
4.4.2 Timing. For purposes of determining the Profits, Losses or
------
any other items allocable to any period, Profits, Losses and any such other
items shall be determined on a daily, monthly or other basis, as determined by
the tax matters partner and approved by the Executive Committee using any
permissible method under Code Section 706 and the Regulations thereunder.
4.4.3 Method. Except as otherwise provided in this Agreement, all
------
items of Partnership taxable income, gain, loss, deduction and credit shall be
allocated in the manner provided for Book Purposes and any allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share Profits or Losses, as the case may be. However,
notwithstanding any other provisions of this Agreement, the General Partners
shall be allocated not less than 1% of each item of Partnership income, gain,
loss, deduction or credit, except to the extent such an allocation would be
contrary to the provisions of Section 704(b) or (c) of the Regulations.
4.5 Tax Allocations: Code Section 704(c).
------------------------------------
4.5.1 Section 704(c). Except as otherwise provided in this
--------------
Agreement, all items of Partnership taxable income, gain, loss, deduction and
credit shall be allocated in the manner as provided for Book Purposes. For
purposes of Code Section 704(c), income, gain, loss and deduction with respect
to any property contributed to the capital of the Partnership shall, solely for
tax
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<PAGE>
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such property to the Partnership for federal
income tax purposes and its Gross Asset Value. With respect to (i) property
contributed by the Cardwell Partners prior to the Effective Date, and (ii) any
"reverse Code section 704(c) allocations" resulting from the revaluation of
Partnership property pursuant to Regulations Section 1.704-1(b)(2)(iv)(f) and
any post-Effective Date Section 704(c) Allocations (collectively the "Section
704(c) Allocations"), the Board of Directors shall determine the Code Section
704(c) method with respect to any such Section 704(c) Allocations. Allocations
pursuant to this Section 4.5.1 are solely for purposes of Federal, state and
local taxes and (with the exception of the remedial allocation method) shall not
affect, or in any way be taken into account in computing, any Partner's Capital
Account or share of Profits, Losses, other items, or distributions (other than
Minimum Tax Distributions and Net Profits Allocations) pursuant to any provision
of this Agreement.
4.5.2 Election. The Partnership shall make the election described
--------
in Code Section 754 for its taxable year including the Effective Date. Any
other elections or other decisions relating to allocations shall be made by the
Executive Committee in any manner that reasonably reflects the purpose and
intention of this Agreement.
4.6 Tax Matters Partner.
-------------------
4.6.1 Appointment. By executing this Agreement, each Partner
-----------
appoints and designates Petro as the "tax matters partner"
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<PAGE>
of the Partnership, as such term is defined under the Code. Any action taken by
the tax matters partner that could adversely affect the taxes of the Partnership
or any Partner, including any extension of the statute of limitations, shall be
subject to the unanimous approval by the Executive Committee which approval
shall not be unreasonably withheld or inconsistent with prevailing authority.
Any such action, to the extent permitted by law, shall be binding upon the
Partners. To the extent permitted by law, each Partner further agrees that such
Partner will not treat any Partnership item inconsistently on such Partner's
income tax return with the treatment of the item on the Partnership's tax return
and that such Partner will not independently act with respect to tax audits or
tax litigation affecting the Partnership, unless previously authorized to do so
in writing by the Executive Committee, which authorization may be withheld in
the reasonable discretion of the Executive Committee.
4.6.2 Elections. At the direction of the Executive Committee, the
---------
tax matters partner shall cause the Partnership to make all elections required
or permitted to be made by the Partnership under the Code and not otherwise
expressly provided for in this Agreement, in the manner that the Executive
Committee determines will be most advantageous to all Partners.
4.6.3 Miscellaneous. The tax matters partner shall be (i) the
-------------
"designated organizer" of the Partnership for the purpose of registering it as a
tax shelter pursuant to Section 6111 of the Code and Temporary Treasury
Regulation (S) 301.6111-1T and (ii) the "designated person" for the purpose of
maintaining lists of
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<PAGE>
investors in the Partnership pursuant to Section 6111 of the Code and Temporary
Treasury Regulation (S) 301.6112-1T. The tax matters partner shall timely cause
the Partnership to be registered as a tax shelter if required under Section 6111
of the Code and shall take all actions required by Section 6112 of the Code to
maintain a list of the names of the Limited Partners, their addresses, and their
taxpayer identification numbers, to the extent such information is provided to
the tax matters partner.
4.6.4 Reimbursement. Subject to the approval of the Executive
-------------
Committee, for purposes of fulfilling and diligently carrying out its duties as
the tax matters partner, the tax matters partner shall be entitled to
reimbursement from the Partnership of all reasonable expenses incurred by it and
shall be entitled to utilize Partnership personnel and employ, at Partnership
expense, accountants, attorneys and any other professional advisors.
ARTICLE V
DISTRIBUTIONS
-------------
5.1 Distributions.
-------------
5.1.1 Authority. The Executive Committee may make such
---------
distributions at such times and in such amounts as it considers appropriate in
its absolute discretion; provided that any Minimum Tax Distributions pursuant to
Section 5.1.2(a) shall be made on not less than a quarterly basis.
5.1.2 Priority. Available Cash plus an amount equal to Minimum
--------
Tax Distributions ("Distributable Cash") shall be distributed to the Partners as
follows:
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(a) First, among the Partners in proportion to their Common
Percentage Interests, until each Partner has received an amount equal to its
Minimum Tax Distribution as determined in accordance with Section 5.2;
(b) Next, among the Partners in proportion to their
Preferred Partnership Interests until each such Partner has received an amount
equal to the amount of its current Preferred Return and any unpaid accrued
Preferred Return;
(c) Next, to the Partners in proportion to (at the
discretion of the Executive Committee) their Preferred or Common Sharing
Percentages, to the extent of any Unrecovered Capital therefor; provided that
liquidating distributions shall be first made to the extent of any Unrecovered
Capital in respect of Preferred Partnership Interests; and
(d) Thereafter, to the Partners in accordance with their
positive Capital Account balances.
5.1.3 Adjustment. In making distributions (other than Minimum Tax
----------
Distributions) pursuant to this Section 5.1, the Executive Committee shall
reduce the amount of any distribution otherwise payable to a Partner by the
amount of any prior Section 704(c) Distributions. Distributions so applied
shall reduce the amount of the Section 704(c) Distributions previously made. The
Executive Committee shall have the authority to pay distributions in cash or in
kind. In the case of a distribution in kind, the value of each item of property
shall be distributed to the Partners, to the extent practicable, in the priority
of Section 5.1.2.
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<PAGE>
5.2 Minimum Tax Distributions. A Minimum Tax Distribution shall be made
-------------------------
to a Partner holding a Common Partnership Interest in an amount equal to the
following:
(a) U.S. Taxes Due; less
(b) the sum of (i) Minimum Tax Distribution Carryforwards
(but only to the extent not previously applied against U.S. Taxes Due) and (ii)
aggregate distributions (other than Minimum Tax Distributions) to such Partner;
provided, that, for this purpose distributions to Mobil shall not include any
- -------- ----
distributions in respect of its Preferred Partnership Interest. Any reduction in
Minimum Tax Distributions required pursuant to clause (b) as a result of prior
distributions (other than Minimum Tax Distributions), shall result in the prior
distributions being recharacterized as a Minimum Tax Distribution only for
purposes of this Section 5.2 and shall not be considered a Section 704(c)
Distribution.
Notwithstanding the reductions required under Sections 5.2(b) or 5.2(c), no
recharacterization of a Minimum Tax Distribution Carryforward under Section
5.2(b) as a Minimum Tax distribution or other distributions under Section 5.2(c)
as Minimum Tax Distributions shall have the effect of recharacterizing such
reductions as "Section 704(c) Distributions" (as defined below). In the event
the reductions under Sections 5.2(b) or 5.2(c) reduce a Minimum Tax Distribution
distributable to a Partner to an amount less than such Partner's U.S. Taxes Due,
the Executive Committee may, in its discretion, unanimously agree to decrease
the reductions to be made under Sections 5.2(b) or 5.2(c) in an amount
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<PAGE>
necessary for a Partner to receive a distribution with respect to Minimum Tax
Distributions in an amount needed to pay such Partner's U.S. Taxes Due.
Minimum Tax Distributions made with respect to Section 704(c) Allocations
to a Partner shall be considered advances by the Partnership to such Partner
governed by Section 3.3 hereof ("Section 704(c) Distributions"). If
Distributable Cash is sufficient to make Minimum Tax Distributions (determined
without regard to any allocations related to basis adjustments pursuant to Code
Section 743(b)) to all Partners otherwise entitled to such distributions, then
Minimum Tax Distributions shall be determined without regard to any allocations
related to basis adjustments pursuant to Code Section 743(b). If Distributable
Cash is insufficient to make such Minimum Tax Distribution (as redetermined),
then Minimum Tax Distributions shall be determined with regard to the allocation
related to the basis adjustments pursuant to Code Section 743(b). Minimum Tax
Distributions shall be made by the Partnership pursuant to Section 5.1.2(a) only
with respect to Net Profits Allocations on or after January 1, 1997. Minimum
Tax Distributions and all factors relevant to the determination thereof shall be
determined on a consolidated basis with the Company's subsidiaries.
5.3 Distribution to Limited Partners. It is the intent of the parties
--------------------------------
hereto that no distribution to any Limited Partner shall be deemed a return of
money or other such property in violation of the Act. This provision shall be
deemed to be a compromise within the meaning of Section 17-502(b) of the Act,
and
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<PAGE>
the Limited Partner receiving any such money or property shall not be required
to return any such money or property to the Partnership, any creditor of the
Partnership or any other Person. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Limited Partner is obligated to return such money or property, such obligation
shall be the obligation of such Limited Partner and not of the General Partners.
5.4 Redemption of Preferred Partnership Interests. On the date which is
---------------------------------------------
270 days after the tenth anniversary of the date hereof (the "Redemption Date"),
the Partnership shall redeem the Preferred Partnership Interests by distributing
to the Partners holding such interests amounts equal to the Unrecovered Capital
and any unpaid and accrued Preferred Return with respect thereto. Upon
redemption of any Preferred Partnership Interest in accordance with this Section
5.4 such Preferred Partnership Interest shall be deemed cancelled. In the event
that the Company offers to redeem any Preferred Partnership Interests prior to
the Redemption Date, such offer shall be made pro rata to all holders of
Preferred Partnership Interests.
5.5 Limitation of Distributions. Notwithstanding any provision to the
---------------------------
contrary contained in this Agreement, the Partnership, and the Executive
Committee on behalf of the Partnership, shall not make a distribution to any
Partner on account of its interest in the Partnership if such distribution would
violate Section 17-607 of the Act or other applicable law, or any bank credit
agreements or indenture debt instruments to which the Partnership is a party.
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ARTICLE VI
MANAGEMENT
----------
6.1 Board of Directors.
------------------
6.1.1 Authority. Pursuant to the Act, the General Partners hereby
---------
delegate to a committee of the Partners' representatives (the "Board of
Directors") the General Partners' rights, powers and authority to manage and
control the overall business and affairs of the Partnership and to do on behalf
of the Partnership all things that are necessary, proper and desirable to
accomplish the Purpose of the Partnership, with respect to both the policy and
direction of the Partnership. The Board of Directors may authorize and direct
the officers of the Partnership to engage in any kind of activity and execute,
perform and carry out agreements of any kind necessary to, or in connection with
or convenient and incidental to, the accomplishment of the Purpose of the
Partnership, so long as such activities and agreements may be lawfully carried
on or performed by a limited partnership under the laws of the State of
Delaware. The Limited Partners shall have no part in the management or control
of the Partnership, shall have no authority or right to act on behalf of the
Partnership in connection with any matter and, except as expressly provided
herein or as required by the Act, shall have no right to consent to or approve
any action by the Board of Directors. Without limiting the generality of the
duties and obligations of the Board of Directors hereunder, except as expressly
provided to the contrary herein, the
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<PAGE>
following powers are reserved exclusively to the Board of Directors unless
delegated by the Board of Directors to any Person:
(a) subject to Section 6.4 hereof, and except for the
initial appointments set forth in this Agreement, to employ and retain Persons,
and to prescribe the powers and duties of such Persons, as may be necessary or
appropriate for the conduct of the Partnership's business, including employees
and agents who may be designated as officers with titles including but not
limited to "Chairman," "Chief Executive Officer," "President," "Vice President,"
"Chief Financial Officer," as and to the extent authorized by the Board of
Directors;
(b) to adopt the annual budget of the Partnership and
approve any annual variance from the amount budgeted for capital expenditures;
(c) to change or adopt any incentive compensation plans for
officers, employees and agents of the Partnership and determine amounts payable
under such plans;
(d) to approve the compensation of the officers of the
Partnership, and to approve any base compensation payable to an employee or
agent (other than pursuant to the Marketing Services Agreement or Secondment
Agreement of even date herewith between the Partnership and Mobil Oil
Corporation) of the Partnership that exceeds $100,000 annually for such person;
(e) to select auditors and manage the conduct of legal
proceedings of any form, and to compromise and settle any such proceedings on
whatever terms deemed appropriate by the Board of Directors;
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(f) to receive from Partners contributions to the capital
of the Partnership;
(g) to disburse payments of distributions to Partners
pursuant to Section 5.2;
(h) to disburse other payments as provided for in this
Agreement;
(i) to communicate with the general public, if necessary,
regarding Partnership matters;
(j) to issue to any Partner, in such form and on such terms
as the Board of Directors may consider appropriate, an instrument certifying
that such Partner is the owner of an interest in the Partnership; and
(k) generally to provide all other executive and
administrative undertakings for and on behalf of the Partnership.
6.1.2 Limitations on Authority. The Board of Directors shall have
------------------------
no authority to:
(a) do any act in contravention of this Agreement;
(b) do any act that would make it impossible to carry on
the ordinary business of the Partnership; and
(c) take any action that has been vetoed by a Partner
having a Partner Veto Right.
6.1.3 Duties and Obligations. The Board of Directors shall cause
----------------------
the Partnership to conduct its dealings with third parties in its own name and
as a separate and independent entity. The Board of Directors shall take or
cause to be taken all actions
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<PAGE>
that may be necessary or appropriate for the continuation of the Partnership's
valid existence as a limited partnership under the laws of the State of
Delaware.
6.1.4 Composition. The Board of Directors shall initially consist
-----------
of six (6) persons who shall be appointed, prior to an IPO Incorporation, in
accordance with the provisions of this Article (and the Chartwell Partners shall
have the right to nominate 2 additional persons as members of the Board of
Directors, subject to unanimous Executive Committee approval):
(a) So long as the Cardwell Partners or their Affiliates
collectively directly or indirectly beneficially own at least 51% of Petro, Inc.
and the management of Petro, Inc. is directly or indirectly controlled by the
Cardwell Partners or their Affiliates, and (A) own not less than 7.5% of the
total Common Partnership Interests outstanding or (B) own not less than 75% of
the amount of Preferred Partnership Interests owned by the Cardwell Partners
collectively as of the date hereof, the Cardwell Partners collectively shall
have the right to appoint two persons to the Board of Directors. If the Cardwell
Partners or their Affiliates do not so own Petro, Inc. or own less than 7.5% of
--
the total Common Partnership Interests outstanding and less than 75% of the
amount of Preferred Partnership Interests owned by the Cardwell Partners
collectively as of the date hereof, the Cardwell Partners shall have no right to
appoint any persons to the Board of Directors.
(b) So long as Mobil or its Affiliates own (A) no less than
3.75% of the total Common Partnership Interests outstanding or (B) no less than
50% of the amount of Preferred
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<PAGE>
Partnership Interests owned by Mobil on the date hereof, Mobil shall have the
right to appoint two persons to the Board of Directors. If Mobil or its
Affiliates own less than 3.75% of the total Common Partnership Interests
outstanding and less than 50% of the amount of Preferred Partnership Interests
owned by Mobil on the date hereof, Mobil shall have no right to appoint any
persons to the Board of Directors.
(c) So long as the Chartwell Partners or their Affiliates
own (A) no less than 7.5% of the total Common Partnership Interests outstanding,
the Chartwell Partners collectively shall have the right to appoint two persons
to the Board of Directors. If the Chartwell Partners or their Affiliates own
less than 7.5% of the total Common Partnership Interests outstanding, the
Chartwell Partners shall have no right to appoint any persons to the Board of
Directors.
(d) If a Partner is no longer entitled to appoint members
of the Board of Directors, any members of the Board of Directors that it
appointed shall automatically be removed from the Board of Directors.
(e) Upon an IPO Incorporation, the Board of Director
composition shall be established by the articles of incorporation of the
Corporation.
6.1.5 Term; Vacancies. Each member of the Board of Directors
---------------
shall hold office until death, resignation or removal pursuant to Section
6.1.4(d) or at the pleasure of the Partner or Partners that appointed such
member, and if a vacancy occurs on the Board of Directors, the Partner or
Partners that appointed such
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vacating member shall appoint such member's successor, provided such Partner or
Partners still have appointment power under Section 6.1.4.
6.1.6 Voting. Subject to Section 6.5 hereof, each member of the
------
Board of Directors shall be entitled to one vote on all matters submitted to a
vote of the Board of Directors.
6.1.7 Deadlock. If at any time the Board of Directors, the
--------
Executive Committee or the Partners are unable to reach agreement on matters
described in Section 6.1.1 wherein unanimous vote requirements or Partner Veto
Rights apply and where either unanimous vote is not obtained or Partner Veto
Rights are exercised (other than pursuant to Section 6.6.3), and any member of
the Board of Directors designated by a Partner has given written notice to the
others that a deadlock has occurred (such event, a "Deadlock"), then the
provisions of Section 9.2.2(a) and 9.2.3 (relating to Transfers by the Chartwell
Partners) shall apply.
6.2 Executive Committee.
-------------------
6.2.1 Authority. The Partnership shall have an executive
---------
committee (the "Executive Committee") of the Board of Directors, and the Board
of Directors hereby delegates to the Executive Committee, the authority to take
the following actions and to delegate such authority to any Person:
(a) To take action with respect to matters as to which the
Board of Directors has authority to act during the period between meetings of
the Board of Directors.
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(b) Concurrent with the authority of the Chief Executive
Officer, to terminate the employment of any Senior Officer.
(c) Concurrent with the authority of the Chief Executive
Officer, upon the unanimous approval of the members of the Executive Committee,
to approve the employment of any Senior Officer.
(d) To take such other actions as are specifically provided
for in this Agreement.
6.2.2 Composition. The Executive Committee shall consist of not
-----------
more than three persons, appointed as follows:
(a) The Cardwell Partners collectively shall have the right
to appoint one person to the Executive Committee. The Cardwell Partners hereby
appoint as their initial representative to the Executive Committee the Chief
Executive Officer of Petro, who on the date hereof is Cardwell, Sr.
(b) Mobil shall have the right to appoint one person to the
Executive Committee. Mobil hereby appoints as its initial representative to the
Executive Committee the Manager of U.S. Distillate Business (or successor title)
of Mobil Oil Corporation, who on the date hereof is Mark Skolnik.
(c) The Chartwell Partners collectively shall have the
right to appoint one person to the Executive Committee. The Chartwell Partners
hereby appoint as their initial representative to the Executive Committee the
President of Chartwell Investments Inc., who on the date hereof is Todd R.
Berman.
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<PAGE>
(d) A Partner shall no longer be entitled to representation
on the Executive Committee if it no longer is entitled to appoint any members of
the Board of Directors or have representatives thereon.
6.2.3 Voting. Subject to Section 6.5, each member of the
------
Executive Committee shall be entitled to one (1) vote on all matters submitted
to the Executive Committee for consideration.
6.3 Operating Committee.
-------------------
6.3.1 Authority. The Partnership shall have an operating
---------
committee (the "Operating Committee") of the Board of Directors, and the Board
of Directors hereby delegates to the Operating Committee operations authority
for the Partnership, subject to the review by the Board of Directors and the
Executive Committee.
6.3.2 Composition. The Operating Committee shall be comprised of
-----------
the following persons: (i) the Chief Executive Officer; (ii) the President;
(iii) the Executive Vice President and Chief Financial Officer; (iv) the Senior
Vice President of Operations; (v) the Senior Vice President of Strategic
Planning and Development; (vi) the Vice President of Real Estate Services; (vii)
a representative designated collectively by the Chartwell Partners; (viii) if
the Senior Vice President of Strategic Planning and Development is not a
secondment employee of Mobil, a representative designated by Mobil; and (ix)
such other persons as the Board of Directors shall designate.
6.4 Officers. The Partnership shall have the officers set forth in this
--------
Section 6.4 and such additional officers as the Board
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of Directors may designate. The officers of the Partnership shall manage the
day-to-day affairs of the Partnership at the direction of the Board of Directors
and the Executive Committee.
6.4.1 Chairman. The Partnership shall have a Chairman of the
--------
Board of Directors (the "Chairman"). The Chairman shall preside at all meetings
of the Partners and all meetings of the Board of Directors. Subject to Section
6.5 relating to the applicability of Control Remedy C to the Partnership, the
Chairman and the Executive Committee shall each have the authority to hire and
terminate the employment of any Senior Officer. The Partners hereby appoint
Cardwell, Sr. as the initial Chairman, Chief Executive Officer and President of
the Partnership.
6.4.2 Chief Executive Officer. The Partnership shall have a Chief
-----------------------
Executive Officer who, subject to the authority of the Board of Directors and
the Executive Committee, shall manage the business and affairs of the
Partnership. The Chief Executive Officer shall be the Chairman of the Operating
Committee. In the absence of the Chairman of the Board of Directors, the Chief
Executive Officer shall preside at all meetings of the Partners and all meetings
of the Board of Directors. The Chief Executive Officer shall carry out the
directives of the Board of Directors.
6.4.3 President. The Partnership shall have a President who,
---------
subject to the authority of the Board of Directors and the Executive Committee,
shall serve under the direction of the Chief Executive Officer. In the absence,
incapacity or inability or refusal of the Chief Executive Officer to act, the
President
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shall assume the authority and perform the duties of the Chief Executive
Officer.
6.4.4 Executive Vice President and Chief Financial Officer. The
----------------------------------------------------
Partnership may have an Executive Vice President and Chief Financial Officer who
shall serve under the direction of the Chief Executive Officer. In the absence,
incapacity or inability or refusal of the Chief Executive Officer and the
President to act, the Executive Vice President and Chief Financial Officer shall
(unless the Board of Directors determines otherwise) assume the authority and
perform the duties of the Chief Executive Officer.
6.4.5 Senior Vice President of Strategic Planning and Development.
------------------------------------------------------------
The Partnership may have a Senior Vice President of Strategic Planning and
Development who shall serve under the direction of the Chief Executive Officer.
The Senior Vice President of Strategic Planning and Development shall be
responsible for all aspects of the Partnership relating to human resources,
corporate planning, franchisee business and support services of the Partnership.
The Partners hereby appoint Evan Brudahl as the initial Senior Vice President of
Strategic Planning and Development.
6.4.6 Senior Vice President of Operations. The Partnership may
-----------------------------------
have a Senior Vice President of Operations who shall serve under the direction
of the Chief Executive Officer. The Senior Vice President of Operations shall
be responsible for the operations at sites owned or operated by the Partnership
and fleet business of the Partnership. The Partners hereby appoint Cardwell,
Jr. as the initial Senior Vice President of Operations.
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6.4.7 Vice President of Real Estate Services. The Partnership may
--------------------------------------
have a Vice President of Real Estate Services who shall serve under the
direction of the Chief Executive Officer. The Vice President of Real Estate
Services shall be responsible for all maintenance and improvements of property
and structures, and the development of new locations of the Partnership. The
Partners hereby appoint Travis Roberts as the initial Vice President of Real
Estate Services.
6.4.8 Secretary. The Secretary shall attend all meetings of the
---------
Board of Directors and all meetings of the Partners and record all votes and the
proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for any committees of the Board of Directors, if requested
by such committee. He shall give, or cause to be given, notice of all meetings
of Partners and special meetings of the Board of Directors, and shall perform
such other duties as may from time to time be prescribed by the Board of
Directors or the Chairman. He shall have custody of the seal of the
Partnership, if any, and he, or an Assistant Secretary, shall have authority to
affix the same to any instrument requiring it, and, when so affixed, the seal
may be attested by his signature or by the signature of such Assistant
Secretary.
6.4.9 Limitation. A Limited Partner, any Affiliate thereof or an
----------
employee, stockholder, partner, member, manager, agent, director, officer or
representative of a Limited Partner or any Affiliate thereof, may also be an
employee, agent, stockholder, partner, member, manager, director, officer or
representative of
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the Partnership or a General Partner. The existence of these relationships and
acting in such capacities will not result in the Limited Partner being deemed to
be participating in the control of the business of the Partnership or otherwise
affect the limited liability of the Limited Partner.
6.4.10 Authority Generally. Unless specifically reserved to the
-------------------
Board of Directors under this Agreement, the officers of the Partnership shall
have such authority as is necessary and appropriate to carry out the functions
of such officer. Each officer of the Partnership shall have such additional
authority, including authority to execute documents, instruments and agreements
on behalf of the Partnership, as is expressly delegated to such officer by the
Board of Directors. One Person may hold one or more offices simultaneously.
6.5 Modifications to Control.
------------------------
6.5.1 Loan Default. In the event that the Partnership is in
------------
violation of any covenant under any loan document with respect to any lender to
the Partnership, then Control Remedy A and Control Remedy B shall apply to the
Partnership.
6.5.2 EBITDA Control Remedy A. In the event that EBITDA Actual
-----------------------
Results of the Partnership's operations for the latest four quarters commencing
with the second full calendar quarter after the date hereof are less than 95% of
the EBITDA Projections for such period, then Control Remedy A shall apply to the
Partnership.
6.5.3 EBITDA Control Remedy B. In the event that EBITDA Actual
-----------------------
Results of the Partnership's operations for the
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latest four quarters commencing with the second full calendar quarter after the
date hereof are less than 90% of the EBITDA Projections for such period, then
Control Remedy B shall apply to the Partnership.
6.5.4 Control Remedy C. In the event that (i) the Partnership is
----------------
in violation of any covenant under any loan document with respect to any lender
to the Partnership, and such violation is not waived or cured within the period
permitted by such agreement, or (ii) the Partnership is in default of the terms
of payment of principal or interest under any loan document with respect to any
lender to the Partnership, or (iii) EBITDA Actual Results of the Partnership's
operations for the latest five quarters commencing with the second full calendar
quarter after the date hereof are less than 85% of the EBITDA Projections for
such period, then Control Remedy C shall apply to the Partnership. Control
Remedy C shall continue to apply until EBITDA Actual Results of the
Partnership's operations for the latest five quarters remain above 95% of the
EBITDA Projections for such period for three consecutive quarters, at which
point in time the provisions of Control Remedy C shall no longer apply. Any
reductions in the levels of authority of the Chairman or any Senior Officer, and
any management replacements, as a result of the application of Control Remedy C
to the Partnership, shall remain in effect until such time as the Board of
Directors approves otherwise.
6.5.5 No Limitation. Nothing in this Section 6.5 shall be deemed
-------------
to imply or indicate that the Board of Directors
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shall not have the authority, in the absence of the conditions referred to in
Sections 6.5.1, 6.5.2 and 6.5.3, to take any of the Board actions set forth in
Control Remedy A, Control Remedy B and Control Remedy C, which authority is
hereby confirmed.
6.6 Major Decisions.
---------------
6.6.1 In General. The Partnership shall not take any of the
----------
following actions without the consent of all Partners having Partner Veto
Rights:
(a) Amend or cancel any agreement (subject to the
provisions of such agreement), or enter into a new agreement, between the
Partnership and a Partner or Affiliate of a Partner;
(b) Acquire any real property that serves or is intended to
serve as a truck stop in the business of the Partnership;
(c) Enter into a franchise agreement relating to the name
or any aspect of the Partnership's business with any Person; or
(d) Permit the tax matters partner to take any position or
make any decision that could materially adversely affect the Partnership or any
Partner;
(e) In accordance with Section 8.1, amend any of the
following Articles or Sections of this Agreement: Sections 6.1.4 (Composition of
the Board of Directors), 8.1 (Amendments), 3.1.3 (Capital Contribution Rights),
5.1.2 (Cash Distributions), Article IV (Allocations), 11.1 (Noncompetition), 9.2
(Transfer and Assignment), or Article VI (Management); and
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<PAGE>
(f) In accordance with and subject to Section 9.1, admit
any new Limited Partners to the Partnership.
6.6.2 Partner Veto Rights. Only the Partners specified in this
-------------------
Section 6.6.2 shall have the right to veto ("Partner Veto Rights") any of the
actions by the Board of Directors, the Executive Committee, the Operating
Committee or the Partnership set forth in Section 6.6.1 if such Partner
maintains the requirements of ownership of Partnership Interests set forth in
this Section 6.6.2 for such Partner:
(a) So long as Mobil or its Affiliates own no less than
7.5% of the total outstanding Common Partnership Interests or no less than 50%
of the amount of Preferred Partnership Interests owned by Mobil on the date
hereof, Mobil shall have Partner Veto Rights.
(b) So long as the Chartwell Partners or their Affiliates
collectively own no less than 7.5% of the total outstanding Common Partnership
Interests, Holdings GP shall have Partner Veto Rights.
(c) So long as the Cardwell Partners or their Affiliates
own no less than 7.5% of the total outstanding Common Partnership Interests or
own at least 75% of the amount of Preferred Partnership Interests owned on the
date hereof, Petro shall have Partner Veto Rights.
6.6.3 Additional Limitations on Actions of the Partnership. So
----------------------------------------------------
long as Mobil or its Affiliates own no less than 3.75% of the total outstanding
Common Partnership Interests or no less than 50% of the Preferred Partnership
Interests owned by Mobil
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<PAGE>
on the date hereof, the Partnership shall take no action that is a material
adverse change to Mobil, in Mobil's reasonable opinion, in Petro's national
retail image standards and marketing strategy; provided, however, that the
-------- -------
provisions hereof shall not prevent the Partnership from acquiring one or more
truck stops if such acquired truck stops will not be branded Petro or Mobil
until they meet such standards.
6.6.4 Voting. Except as specifically set forth in Section 17-216
------
of the Act, no Partner shall have any right to vote on any matter relating to
the Partnership except as expressly provided in this Agreement. No class of
Partners shall have any right to vote as a class on any matter relating to the
Partnership except as expressly provided in this Agreement. The Partnership may
merge with, consolidate into, or convert into, another Person only upon the
unanimous consent of the Partners that have Partner Veto Rights (without the
need for the consent of any other Person); provided, however, that the
-------- -------
Partnership may merge with, consolidate into, or convert into, another Person to
consummate an IPO Incorporation upon the approval of only the Chartwell Partners
(without the need for the consent of any other Person (subject to Section 12.1.6
of this Agreement)).
6.7 Right to Rely on Chairman or Secretary. Any Person dealing with the
--------------------------------------
Partnership may rely (without duty of further inquiry) upon a certificate signed
by the Chairman or Secretary as to the identity of any Partner, the Persons who
are authorized to execute and deliver any instrument or document of the
Partnership
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and any act or failure to act by the Partnership or any other matter whatsoever
involving the Partnership or any Partner.
6.8 Meetings and Approval Requirements of Board of Directors and
------------------------------------------------------------
Committees.
- ----------
6.8.1 Regular Meetings. The Board of Directors and its committees
----------------
shall hold regular meetings at such times and places as are established by the
consent of the Board of Directors or such committees.
6.8.2 Special Meetings. A special meeting of the Board of
----------------
Directors or any committee thereof shall be held at the written request of any
member of the Board of Directors or such committee.
6.8.3 Telephonic Meetings. Any meeting of the Board of Directors
-------------------
or any committee thereof may be held by conference telephone call or through
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a telephonic meeting held
pursuant to this Section shall constitute presence in person at such meeting.
6.8.4 Notices. Notices of regular meetings of the Board of
-------
Directors or its committees are not required. Notices of special meetings of
the Board of Directors or its committees shall state the date and hour of the
meeting and the purpose or purposes for which the meeting is called. Special
meetings shall be held at the address of the Partnership or at such other place
as shall be agreed to by the members of the Board of Directors or such
committee. The notice of a special meeting shall be given to each member of the
Board of Directors or its committees in writing not
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less than one (1) or more than ten (10) days prior to the date of the meeting.
Members of the Board of Directors or its committees may waive in writing the
notice requirements hereunder before, at or after the relevant special meeting.
Notices shall be delivered personally, by telecopy or recognized overnight
delivery service to the last known business address of each member of the Board.
6.8.5 Quorum. At each meeting of the Board of Directors or its
------
committees, the presence in person or by telephone of a majority of the votes of
the members of the Board of Directors or such committee, provided that at least
one nominee of each of the Cardwell Partners, the Chartwell Partners and Mobil
(so long as each shall be entitled to membership thereon) shall be present,
shall be necessary to constitute a quorum for the transaction of business.
6.8.6 Approval Requirements. Subject to Section 6.6.1 (relating
---------------------
to major decisions), consent or approval of the Board of Directors or its
committees shall mean the affirmative vote of a majority of the votes of the
members of the Board of Directors or such committees present in person or by
telephone, as applicable, and voting at a duly held meeting of the Board of
Directors or its committees.
6.8.7 Written Consents. Any action required or permitted to be
----------------
taken at a meeting of the Board of Directors or its committees may be taken
without a meeting if all of the members of the Board of Directors or such
committee consent thereto in writing. Such consents shall be filed with the
minutes of the proceedings of the Board of Directors or such committee.
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ARTICLE VII
LIABILITY AND INDEMNIFICATION
-----------------------------
7.1 General. Each current and former Partner of the Partnership and the
-------
shareholders, partners, officers, directors, members, managers, employees and
agents of each Partner and its Affiliates, including the tax matters partner and
each member of the Board of Directors and each committee thereof and the
officers of the Partnership (individually, an "Exculpated Party") shall not be
liable, responsible or accountable in damages or otherwise to the Partnership or
any Partner and shall be indemnified and held harmless by the Partnership, to
the fullest extent permitted by law, with respect to any liability, damage,
loss, injury, expense and cost (including reasonable attorneys' fees) to any
Person for any act or omission performed or omitted: (a) in good faith on behalf
of the Partnership; (b) in a manner reasonably believed by such Person to be
within the scope of the authority granted to such Person by this Agreement or
the Board of Directors; and (c) in a manner not constituting willful misconduct,
fraud, breach of such Person's fiduciary duty of loyalty or gross negligence.
The Partnership shall indemnify, defend and hold harmless each Exculpated Party,
to the fullest extent permitted by law, for any such acts or omissions, and for
any acts or omissions not meeting such requirements to the extent that a court
determines that in view of all the circumstances of the case, such Exculpated
Party is fairly and reasonably entitled to indemnification for those expenses
that the court deems proper. If approved by the Board of Directors, expenses
(including reasonable attorneys' fees and
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costs) incurred by an Exculpated Party in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Partnership in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Exculpated
Party to repay such amount if it shall ultimately be determined that such
Exculpated Party is not entitled to be indemnified by the Partnership.
7.2 Intentionally Deleted.
---------------------
7.3 Indemnification by Petro Partners. The Petro Partners (with such
---------------------------------
several, or joint and several liability as set forth in the definition of Petro
Indemnifying Party in Section 1.1) agree, to the fullest extent permitted by
law, to indemnify the Partnership, the Bechtel Partners, their assigns and any
Petro Partner who is not an Indemnifying Party with respect to a particular
Petro Indemnified Loss, together with their respective Indemnified Parties, from
and against, and to hold them harmless from any Petro Indemnified Loss.
7.4 Survival. The obligations of the Petro Partners contained in Section
--------
7.3 shall survive without limitation in time, except as specifically set forth
in the definition of "Petro Indemnified Loss" in Section 1.1.106 hereof.
7.5 Indemnification Procedures. In any instance where the Partnership or
--------------------------
a Petro Partner is the Indemnifying Party, the provisions of this Section 7.5
shall apply:
7.5.1 Notice. Promptly after the determination of an Indemnified
------
Loss or the assertion of any claim or the commencement of any action by any
third party in respect of which a Person is
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entitled to be indemnified or held harmless under this Agreement, the
Indemnified Person shall notify the Indemnifying Parties in writing of the
Indemnified Loss or the assertion of claim or commencement of action.
7.5.2 Reimbursement. In the case of an Indemnified Loss not
-------------
involving an assertion of claim or commencement of action by any third party,
the Indemnifying Parties shall promptly reimburse the Indemnified Person for all
damages, loss, injury, expense and costs, including reasonable attorneys' fees
and costs which the Indemnified Person has suffered or may thereafter suffer as
a result thereof.
7.5.3 Defense by Indemnifying Parties. Promptly after the
-------------------------------
assertion of any claim or the commencement of any action by any third party in
respect of which an Indemnified Person is entitled to be indemnified or held
harmless under this Agreement, the Indemnified Person shall notify the
Indemnifying Parties in writing of such assertion or commencement. Subject to
paragraph 7.5.4 below, the Indemnifying Parties shall, at the Indemnifying
Parties' expense, assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Person. Subject to paragraph 7.5.4 below, the
Indemnifying Parties shall have full control of the defense, including any
compromise or settlement; provided, however, that any settlement requiring
-------- -------
material nonmonetary consideration from the Indemnified Person must be approved
in advance by the Indemnified Person, which approval shall not be unreasonably
withheld.
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7.5.4 Defense by Indemnified Person. If the Indemnifying Parties
-----------------------------
fail to diligently and promptly defend or settle the claim or action after
notice, which failure continues for more than thirty (30) days after such
notice, or if the Indemnified Person is the Partnership or one or more of the
Bechtel Partners, then the Indemnified Person shall have the right to defend, at
the sole cost and expense of the Indemnifying Parties, the claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Person to a final conclusion or settled. If the
preceding sentence applies, the Indemnified Person shall have full control of
such defense and proceedings, provided, however, that without the Indemnifying
-------- -------
Parties' consent, which shall not be unreasonably withheld, the Indemnified
Person may not enter into any compromise or settlement of such claim; and
provided, further, however, that if the Indemnified Person receives a bona fide
- -------- ------- -------
offer of monetary settlement (without the requirement for material nonmonetary
settlement terms that the Indemnified Person in its sole discretion determines
to be contrary to the Indemnified Person's best interests) for any such claim
with respect to which the Indemnifying Parties are obligated to indemnify such
Indemnified Person, the Indemnified Person shall inform the Indemnifying Parties
of the proposed settlement terms and if the Indemnifying Parties are willing and
able to pay such settlement upon its terms but the Indemnified Person is not
willing to settle on such terms, the maximum indemnification that the
Indemnifying Parties must provide to the Indemnified Person with respect to such
claim shall
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be the amount of such bona fide offer of settlement the Indemnifying Parties
were willing and able to pay (plus expenses and costs, including reasonable
attorneys' fees, incurred to the date such settlement offer is rejected by the
Indemnified Person). If requested by the Indemnified Person, the Indemnifying
Parties shall, at the sole cost and expense of the Indemnifying Parties,
cooperate with the Indemnified Person and its counsel in contesting any claim
related to the Indemnified Loss that the Indemnified Person is contesting, or,
if appropriate and related to the claim in question, in making any compulsory
counterclaim against the Person asserting the claim or any cross-complaint
against any Person.
7.5.5 Fees and Expenses. The Indemnified Person shall have the
-----------------
right to employ separate counsel in any action and to participate therein, but
the fees and expenses of such counsel shall be at the expense of the Indemnified
Person unless (i) the employment thereof has been specifically authorized by the
Indemnifying Parties in writing, (ii) paragraph 7.5.4 above shall be applicable,
or (iii) the named parties to such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Person, and the
Indemnified Person shall have been advised by counsel that there are likely to
be one or more meritorious legal defenses available to it which are different
from or in addition to those available to the Indemnifying Parties. In the
event any of the conditions set forth in this paragraph 7.5.5 are met, the
Indemnifying Parties shall not have the right to assume the defense of such
action on behalf of the Indemnified
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Person but shall indemnify the Indemnified Person against all litigation
expenses (including reasonable fees and expenses of counsel) in connection with
such defense. In the event the conditions set forth in this paragraph 7.5.5 are
met, the Indemnified Person shall have the right to select such Person's
counsel, which counsel must be reasonably satisfactory to the Indemnifying
Parties.
7.5.6 Periodic Payments. Indemnification hereunder shall be made
-----------------
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or loss, damage,
liability, cost or expense is incurred; provided, however, that no settlement or
-------- -------
compromise of any claim asserted or action commenced in respect of which the
Indemnifying Parties will be liable in accordance with its indemnity under this
Agreement shall give rise to liability of the Indemnifying Parties unless the
Indemnifying Parties shall have been notified in writing of the proposed
settlement or compromise and shall have consented in writing thereto, which
consent shall not be unreasonably withheld. Promptly after the discovery of any
facts or circumstances giving rise to any claim for indemnification under this
Agreement, the Indemnified Person shall notify the other parties of the
existence of such claim and the basis therefor, provided, however, that the
-------- -------
failure of any Indemnified Person to give such notice promptly shall not relieve
the Indemnifying Parties of the indemnity obligations except to the extent that
such failure shall adversely affect the ability to defend against third party
claims or actions to which the indemnity obligation applies.
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7.5.7 Intentionally Deleted.
---------------------
7.5.8 Insurance. The liability of any Indemnifying Parties
---------
hereunder shall be reduced by the amount of insurance, including title insurance
and liability insurance, and any other amounts that may be recovered by the
Indemnified Person from any third party, provided, however, that the Indemnified
-------- -------
Person shall have no obligation to exhaust available remedies against any
insurer or other third party, and it shall be the obligation of, and at the sole
expense of, the Indemnifying Parties to pursue any remedies that may be
available from any third party to reduce the amount otherwise payable by the
Indemnifying Parties and the Indemnified Person shall use reasonable efforts to
assist and cooperate with the Indemnifying Parties (at the expense of the
Indemnifying Parties) in pursuing such remedies. So long as the Indemnifying
Parties shall be diligently pursuing remedies against any such third party,
which remedies counsel for the Indemnifying Parties (who shall be reasonably
acceptable to the Indemnified Person) shall have informed the Indemnified Person
to be reasonably meritorious in the opinion of such counsel, and so long as the
Indemnifying Parties shall have posted such bonds and otherwise entered into
arrangements satisfactory to the Indemnified Person (in such Person's sole but
reasonable discretion) to assure the Indemnified Person that it will not be
adversely affected by delay in payment (including loss of interest of cost of
funds, as applicable) by the Indemnifying Parties, the Indemnifying Parties may
defer payment of amounts which they would otherwise be obligated to pay
hereunder to the extent that such third party may
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be liable therefor. If in the opinion of the Indemnified Person, the
Indemnified Person has remedies available to it against third parties and the
Indemnifying Parties do not have such remedies available to them against the
same third parties, then at the option of the Indemnifying Parties, the
Indemnified Person shall, at the sole cost of the Indemnifying Parties, exhaust
available remedies against any such third party; provided, however, that the
-------- -------
Indemnifying Parties shall use all reasonable efforts to assist and cooperate
with the Indemnified Person (at the expense of the Indemnifying Parties) in
pursuing such remedies; and provided further, however, that the Indemnifying
---------------- -------
Parties shall have posted such bonds and otherwise entered into arrangements
satisfactory to the Indemnified Person (in such Person's sole but reasonable
discretion) to assure the Indemnified Person that it will not be adversely
affected by delay in payment (including loss of interest or cost of funds, as
applicable) by the Indemnifying Parties.
7.6 Liabilities in Exhibit D of the Participation Agreement and
-----------------------------------------------------------
Obligations. The parties acknowledge that the liabilities and obligations
- -----------
listed on Exhibit D of the Participation Agreement were not assumed by the
Partnership and continue as the sole responsibility of the Person or Persons
having responsibility therefor prior to the closing of the First Amended
Agreement and the Participation Agreement. Should the Partnership (or any
Partners in the Partnership other than the responsible Person) become liable or
obligated or should any claim or allegation be made that the Partnership (or any
Partners in the Partnership other than the responsible Person) are liable or
obligated in respect
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thereof, such matter shall be treated as a Petro Indemnified Loss under this
Agreement.
7.7 No Personal Liability for Indemnification. Notwithstanding anything
-----------------------------------------
to the contrary in this Agreement, in no event will any indemnification
obligation set forth in this Article VII or otherwise subject any Partner to
personal liability.
ARTICLE VIII
AMENDMENTS
----------
8.1 Amendments. Subject to Section 6.6.1(e) or as otherwise provided in
----------
this Agreement, this Agreement may be amended if such amendment is approved by
the holders of 66 2/3% of the Common Partnership Interests (determined by
reference to Capital Account balances as most recently calculated prior to the
date of the relevant vote or consent); provided, however, that no provision of
-------- -------
this Agreement may be amended in a manner which would alter or change the
powers, preferences or special rights of the Partnership Interests or a Partner
so as to adversely affect the rights of the holder of such Partnership Interests
or such Partner without the consent of such Partner. Amendments to this
Agreement may be made only by an instrument in writing signed by the Partners
whose consent is required. Without the consent of any other Person, the Board
of Directors may amend and revise Schedule A to this Agreement to properly
----------
reflect any changes required to be reflected thereon by this Agreement.
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ARTICLE IX
ADMISSIONS; EXITS AND TRANSFERS
-------------------------------
9.1 Admission of Additional Limited Partners. Subject to Section 3.1.4,
----------------------------------------
the Partners owning a majority of the Common Partnership Interests at any time
may admit any Person who shall agree to be bound by all of the terms of this
Agreement as an additional Limited Partner upon the consent of all Partners
having Partner Veto Rights at such time, which consent may not be unreasonably
withheld. The amount of any initial Capital Contribution to be made by such new
Limited Partner shall be determined by the Board of Directors. Effective upon
such admission, the Sharing Percentage of each existing Partner of the
Partnership shall be adjusted pro rata to reflect the Partnership Interest of
the new Limited Partner, and Schedule A shall be revised to reflect such
----------
adjusted Sharing Percentages as well as the name and initial Capital
Contribution of such new Limited Partner. For purposes of this Section 9.1, the
withholding of consent shall not be deemed unreasonable if based on a material
retail image issue or a competitive petroleum issue or the likelihood that such
new Limited Partner would have a detrimental effect on the business of the
Partnership.
9.2 Restriction on Transfers by Partners.
------------------------------------
9.2.1 General. No Partner shall sell, assign or otherwise dispose
-------
of or transfer ("Transfer") all or any portion of its Partnership Interest
except in accordance with the provisions of this Section 9.2 and Section 13.8,
except as heretofore
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otherwise disclosed in writing to the Partners and except as required by the
lenders to the Partnership.
9.2.2 Chartwell Transfers.
-------------------
(a) If a Deadlock occurs or the Chartwell Partners otherwise
desire to Transfer some or all of their respective Partnership Interests, the
provisions of this Section 9.2.2(a) shall apply. The Chartwell Partners first
may deliver a written notice to the Partnership and the other Partners (in the
case of a Deadlock, within 45 days after the occurrence of such Deadlock), which
notice shall include a statement designating the Partnership Interests that the
Chartwell Partners desire to Transfer. Within thirty (30) calendar days after
receipt of such notice by the Cardwell Partners, the Cardwell Partners shall
notify the Chartwell Partners and Mobil of the price (the "Cardwell Buy Price")
at which the Cardwell Partners propose that the Cardwell Partners and/or Mobil
may purchase the Partnership Interests designated by the Chartwell Partners.
Within thirty (30) calendar days after receipt of the Cardwell Buy Price by the
Chartwell Partners, the Cardwell Partners and Mobil shall have the right to
offer to purchase, or to designate a third party to purchase, the Partnership
Interests of the Chartwell Partners at the Cardwell Buy Price in proportion to
each of Cardwell Partners' and Mobil's respective shares of the aggregate of the
Cardwell Partners' and Mobil's Common Partnership Interests or otherwise as the
Cardwell Partners and Mobil Partners may agree. If the Cardwell Partners
collectively or Mobil do not offer to purchase all or part of their
proportionate shares of the aggregate of the Chartwell Partners'
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and Mobil's Common Partnership Interests, such Cardwell Partners on the one hand
and Mobil shall notify the remaining party. Such remaining parties shall have
the right to offer to purchase all or part of such remaining Partnership
Interests of the Chartwell Partners. If the Chartwell Partners decline the
Cardwell Buy Price or the Cardwell Partners and Mobil elect not to offer to
purchase the Partnership Interests of the Chartwell Partners, the Chartwell
Partners shall have one hundred eighty (180) calendar days, after the receipt of
a statement of purchase intentions from all of the Cardwell Partners and Mobil,
to market the sale of all outstanding Partnership Interests of the Partnership
at an enterprise value not less than 105% of the Cardwell Buy Price. If the
Chartwell Partners are successful in locating a third party purchaser within one
hundred eighty (180) days after the receipt of a statement of purchase
intentions from all of the Cardwell Partners and Mobil, the Cardwell Partners
and Mobil shall each receive its respective percentage of the sale price of all
of the Partnership Interests of the Partnership determined with reference to the
Cardwell Buy Price. If the Chartwell Partners do not find a third party
purchaser on such terms within such 180-day period, then the Chartwell Partners
shall so notify the Cardwell Partners and Mobil and shall be deemed to have made
an offer to sell to the Cardwell Partners and Mobil (based upon their respective
ownership of Common Partnership Interests) the Partnership Interests of the
Chartwell Partners at a price that is equal to 95% of the Cardwell Buy Price.
If the Cardwell Partners and Mobil do not accept the offer to purchase the
Partnership Interests of the Chartwell Partners at a
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price that is equal to 95% of the Cardwell Buy Price within 30 days after the
end of the 180 days, the Chartwell Partners shall have the right to market and
arrange to sell all of the Partnership Interests of the Partnership to a third
party at the best price that it is able to obtain. Upon such sale, the Cardwell
Partners and Mobil shall receive their respective share of the proceeds of such
sale based on their respective ownership of Common Partnership Interests;
provided, however, that if the price of such sale would be less than 90% of the
- -------- -------
Cardwell Buy Price, then the Cardwell Partners and Mobil shall have a pro rata
right of first refusal (based on their respective ownership of Common
Partnership Interests or otherwise as they may mutually agree) to purchase the
Partnership Interests of the Chartwell Partners at such price.
(b) A closing on the sale of all or part of the Partnership
Interests owned by the Chartwell Partners must occur within ninety (90) calendar
days after the acceptance of any offer to purchase such Partnership Interests
pursuant to the procedures set forth in Sections 9.2.3(d), (e) and (f) below.
9.2.3 Cardwell Buy-Sell.
-----------------
(a) Notice of Cardwell Buy-Sell. Subject to the last sentence
---------------------------
of this Section 9.2.3(a), if Cardwell, Sr. is terminated as Chairman or Chief
Executive Officer of the Partnership, or he terminates his employment "for good
reason" as defined in his Employment Agreement with the Partnership of even date
herewith, (a "Removal"), or if there is a Deadlock and Chartwell Partners do not
exercise their rights under Section 9.2.2(a), then within thirty (30) days
thereafter the Cardwell
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Partners may give written notice (the "Cardwell Buy-Sell Notice") to each of the
members of the Board of Directors appointed by Mobil and the Chartwell Partners
stating that the Cardwell Partners desire to exercise their rights under this
Section 9.2.3 to sell to, or purchase from, each of Mobil and the Chartwell
Partners, all the Common Partnership Interests and Preferred Partnership
Interests owned by such Partners and their Affiliates (such interests
collectively, the "Entire Interests"). For purposes of determining a purchase
price under this Section 9.2.3(c), the Cardwell Buy-Sell Notice shall specify an
amount that the Cardwell Partners designate to be the gross fair market value of
all assets of the Partnership. The purchase price for the selling Partners'
Partnership Interests shall be determined pursuant to Section 9.2.3(c) (relating
to Purchase Price). Any Cardwell Buy-Sell Notice given by any of the Cardwell
Partners shall be deemed to be given by such party and all of the Cardwell
Partners. Notwithstanding anything else in this Section 9.2.3 to the contrary,
Cardwell, Sr. shall have no rights to buy or sell Partnership Interests pursuant
to this Section 9.2.3 solely because Cardwell, Sr. dies, becomes disabled,
resigns (other than "for good reason"), is terminated for cause, as defined in
the Cardwell, Sr. Employment Agreement or is terminated as a result of the
application of Control Remedy B or Control Remedy C to the Partnership. In the
event that the Cardwell Partners sell their Entire Interests pursuant thereto,
Kirschner shall have the right to sell its Partnership Interests at the same pro
rata Purchase Price, in which event for purposes of this Section 9.2.3 the
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Kirschner Partnership Interests shall be deemed a part of the Cardwell Partners
Entire Interests.
(b) Election. The Chartwell Partners shall have thirty (30)
days after receipt of the Cardwell Buy-Sell Notice to elect by written notice to
the Cardwell Partners (A) to buy the Cardwell Partners' Entire Interests (the
"Buy Option") or (B) to sell to the Cardwell Partners the Entire Interests of
the Chartwell Partners (the "Sell Option"). If the Chartwell Partners elect the
Buy Option, each of Mobil and the Chartwell Partners shall, in the absence of a
contrary agreement between them, be entitled to purchase that proportion of the
selling Cardwell Partners' Entire Interests as such buying Partner's Percentage
Interest bears to the Percentage Interests of all of the buying Partners, but as
to the Cardwell Partners, each buying Partner shall be jointly and severally
obligated with respect to the purchase price for the Entire Interests. If the
Chartwell Partners elect the Sell Option, each Cardwell Partner shall, in the
absence of a contrary agreement between them, be entitled and obligated to
purchase that proportion of the selling Partners' Entire Interests as such
Cardwell Partner's Percentage Interest bears to the Percentage Interests of all
of the Cardwell Partners, but as to the selling Partners each Cardwell Partner
shall be jointly and severally obligated with respect to the purchase price for
the Entire Interests, except that Cardwell, Jr. and JAJCO II shall be jointly
and severally obligated to the selling Partners only for that percentage of the
purchase price which is equal to the percentage that their collective
Partnership Interests bear to the Percentage Interest of all of the
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Cardwell Partners. The Chartwell Partners shall notify the Cardwell Partners of
their election within the thirty (30) day period. If no response is received
from the Chartwell Partners within the thirty (30) day period, such failure to
respond shall be deemed an election of the Sell Option. If either the Buy
Option or the Sell Option is properly exercised or deemed exercised as provided
above, then the Partners shall buy and sell their respective Entire Interests in
accordance with this Section 9.2.3.
(c) Purchase Price. The purchase price of the selling
--------------
Partners' Entire Interests shall equal the net amount which the selling Partners
would receive if the assets of the Partnership were sold for their gross fair
market value specified in the Cardwell Buy-Sell Notice with respect to the
Partnership, the liabilities of the Partnership liquidated and paid, and the net
proceeds distributed to the Partners in accordance with Section 10.3.2. For
purposes of applying this Section 9.2.3, a taxable sale of Partnership assets
shall be deemed to have occurred, Profits, Losses and other items arising from
such deemed sale will be allocated pursuant to Article IV, taking into account
any adjustments to Sharing Percentages which occur by the end of the period
during which the parties not originally giving the Cardwell Buy-Sell Notice must
respond to such notice, and the Partners' Capital Accounts adjusted accordingly.
The Executive Committee shall make the calculations necessary to determine the
purchase price.
(d) Closing; Payment. The closing shall be held at the
----------------
principal office of the Partnership on a business day
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selected by the purchasing Partners, which day shall not be less than thirty
(30) or more than one hundred twenty (120) days after the applicable option is
properly exercised or deemed exercised. The terms of the purchase and sale
shall be unconditional, except that the selling Partners shall be deemed to
represent and warrant that as of the closing they shall have good and marketable
title to their Entire Interests being sold and that such Entire Interests shall
be transferred subject to no claims, liens, encumbrances, options, warrants or
rights of third parties and shall deliver at the closing an instrument
confirming such representations and warranties. At the closing, the following
events shall occur: (A) the purchasing Partners shall deliver an amount equal
to the purchase price determined under Section 9.2.3(c) in immediately available
funds, to the selling Partners; (B) the selling Partners shall deliver to the
purchasing Partners assignments of their Entire Interests being sold without
warranty except as expressly provided above; and (C) the purchasing Partners
shall, in addition to the purchase price determined under Section 9.2.3(c), pay
or cause the Partnership to pay to the respective selling Partners, in
immediately available funds, an amount equal to the principal balance of, and
any accrued and unpaid interest on, any loans of such selling Partners to the
Partnership, which payment shall be deemed a payment to such selling Partners
with respect to such loan to the extent of the amounts so paid.
(e) Failure to Perform. If a selling Partner defaults in its
------------------
obligation to deliver an assignment of its Entire Interest, the defaulting
Partner shall cease to be a Partner of the
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Partnership and shall have no further right or interest under this Agreement or
in and to the Partnership other than to receive its share of the purchase price,
net of damages and expenses resulting from such default. Notwithstanding any
other provision of this Section 9.2.3, if a purchasing Partner wrongfully fails
to close the purchase and sale, the selling Partners shall have the right, by
written notice to the defaulting Partner given within sixty (60) days after the
last date for the closing, to treat the failure to perform as an exercise by
such purchasing Partner of the Sell Option at 95% of the purchase price that the
purchasing Partner would have received for such Partner's Entire Interests
pursuant to Section 9.2.3 as a selling Partner, made as of the date of such
default, and the selling Partners shall then have all of the rights pursuant to
an election of the Buy Option. If the selling Partners do (1) elect to pursue
the Buy Option, the purchase pursuant thereto shall be such selling Partners'
sole and exclusive remedy for such failure; or (2) not elect to pursue the Buy
Option, they may pursue any other rights they may have in equity or at law.
(f) Amendment to Partnership Agreement. If, pursuant to the
----------------------------------
provisions of this Section 9.2.3, any Partner sells, assigns or transfers its
Entire Interest in a permitted manner, then the Partners and the transferee
shall amend this Agreement to reflect such event.
9.2.4 General Right of First Refusal.
------------------------------
(a) Subject to the terms of this Agreement, any Partner may
Transfer, in one or more transactions, up to an aggregate of 25% of the total
Common Partnership Interests owned by
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such Partner on the date hereof by following the procedures in this Section
9.2.4. If a Partner (the "Selling Partner") desires to Transfer 25% or less of
the total Common Partnership Interests owned by such Partner on the date hereof,
the Selling Partner first shall deliver a written notice (the "Transfer Notice")
to the Partnership and the other Partners, together with all agreements,
schedules and documents relating thereto. The Transfer Notice shall name the
proposed transferee (if any), the amount of the Partnership Interest to be
transferred, the purchase price and all other terms and conditions of the
Transfer. In the event the Transfer is to be made without consideration, the
purchase price shall be deemed to be the Fair Market Value of the Partnership
Interest on the date of the Transfer Notice. If the proposed purchase price
includes property and assets other than cash, the cash value of such property
shall be the Fair Market Value of such property.
(b) For twenty (20) Business Days following receipt of the
Transfer Notice (the "Partnership Option Period"), the Partnership shall have
the option to purchase all or a portion of the Partnership Interest specified in
the Transfer Notice at the price and upon the terms set forth in the Transfer
Notice by delivering a written notice to the Selling Partner specifying the
portion of the available Partnership Interests the Partnership desires to
purchase.
(c) In the event the Partnership does not elect to acquire
all of the Partnership Interests specified in the Transfer Notice, the Partners
shall have the option of purchasing
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such available Partnership Interests during the ten (10) Business Day period
immediately following the Partnership Option Period (the "Partner Option
Period"). A Partner electing to purchase such Partnership Interests shall,
within the Partnership Option Period, deliver a written notice to the
Partnership and the Selling Partner specifying the portion of the available
Partnership Interests such Partner desires to purchase. In the event the
available Partnership Interests are oversubscribed, the available Partnership
Interests shall be allocated among the Partners desiring to purchase the
Partnership Interests pro rata, in accordance with the purchasing Partner's
respective ownership of Common Partnership Interests.
(d) In the event the Partnership and/or the other Partners
elect to purchase all of the Partnership Interests as specified in the Transfer
Notice, settlement for such Partnership Interests shall be consummated within
forty-five (45) days after the date of the Transfer Notice; provided, however,
-------- -------
that if the terms and conditions contained in the Transfer Notice specify
consideration other than cash, the Partnership and/or Partners shall pay the
cash value of such consideration as determined in accordance with Section
9.2.4(a). Any Partnership Interests acquired by the Partnership in accordance
with this Section 9.2.4 shall be deemed cancelled and Schedule A shall be
amended accordingly.
(e) In the event the Partnership and/or the other Partners do
not elect to purchase all of the Partnership Interests specified in the Transfer
Notice, the Selling Partner may
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within the 180-day period following the expiration of the Partnership Option
Period, sell such Partnership Interests to a third party at a price equal to or
greater than the price and on terms not materially more favorable to the buyer
than those contained in the Transfer Notice. If the sale is not consummated
within such time period, the provisions of Section 9.2.4 shall again apply to
such Partnership Interests.
(f) Notwithstanding any other provision of this Agreement,
any Transfer of any Partnership Interests in contravention of any of the
provisions of this Agreement shall be void and ineffective and shall not bind or
be recognized by the Partnership. To the fullest extent permitted by law, the
Selling Partner hereby agrees to indemnify and hold harmless, the Partnership
and the other Partners against any and all loss, damage and expense (including
without limitation tax liabilities or loss of tax benefits) arising directly or
indirectly from any Transfer or purported Transfer in violation of this
Agreement.
(g) Kirschner may, subject to the first refusal rights and
procedures set forth in this Section 9.2.4, Transfer all of its Partnership
Interests; provided, that, the Executive Committee approves any third party sale
-------- ----
which approval shall not be unreasonably withheld.
(h) Nothing herein shall preclude any Partner from pledging
its Partnership Interests.
9.2.5 Transfers to Affiliates. Any Partner shall have the right to
-----------------------
Transfer all or part of its Partnership Interests to a majority beneficially
owned Affiliate or an Affiliate which owns
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a majority of such Partner or to an Immediate Family Member of such Partner;
provided, however, that voting rights of such Partners shall not be transferred
- -------- -------
upon Transfer of such Partnership Interest to an Immediate Family Member unless
such Immediate Family Member is admitted to the Partnership in accordance with
Section 9.3.
9.2.6 Rights Upon Transfer. Any Partner that has Transferred all
--------------------
or any portion of its Partnership Interest in accordance with this Agreement may
execute, deliver and perform all such other agreements, documents, instruments
and other writings as are contemplated by the Transfer, including, without
limitation, powers of attorney, credit agreements, liens, mortgages, pledge
agreements and financing statements (the "Transfer Documents"). Transfer
Documents may include such rights and remedies as are agreed to among the
parties to the Transfer and consented to by the Board of Directors, including,
without limitation, information rights, restrictions on assumption of
indebtedness, rights to distributions of the Partnership to the transferor,
foreclosure rights and restrictions on voting and other rights. The Partners
agree that the party in whose favor the rights and remedies are granted is
authorized to exercise those rights and remedies.
9.2.7 Change of Control Restriction. The Partners acknowledge that
-----------------------------
the Indenture relating to the Partnership's 10 1/2% Senior Notes due 2007 and
the Partnership's bank credit agreement contain a "Change of Control" provision
which, if triggered, would create an event of default under any debt instrument
or agreement binding upon the Partnership or its assets. The Partners therefore
agree that, notwithstanding any provision of this Agreement to the
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contrary, except in the event of a transaction pursuant to Section 9.2.2, 9.2.3
or Article XII of this Agreement, no Partner shall be permitted, without the
prior express written consent of the Executive Committee, to receive
distributions in kind, or directly or indirectly transfer Partnership Interests,
in the aggregate equal to or in excess of that amount of equity of the
Partnership or its successor that, together with an assumed similar simultaneous
distribution in kind to all other Partners and all other direct and indirect
Partners in the Partnership in amounts based upon hypothetical liquidations of
the Partnership and such other direct and indirect Partners, would result in a
"Change of Control" occurring under any of the then existing debt documents or
instruments of the Partnership or its successor.
9.3 Rights of Unadmitted Assignees. Without the prior written consent of
------------------------------
the Board of Directors (which consent may be withheld or given in the sole
discretion of the Board of Directors), an assignee of a Partnership Interest
(including, without limitation, anyone who becomes an assignee through the
enforcement of a remedy by a holder of a security interest in a Partnership
Interest) shall not be admitted as a substituted Limited Partner, shall be
entitled only to allocations and distributions with respect to such Partnership
Interest in accordance with this Agreement and shall have no right to any
information or, to the fullest extent permitted by law, to an accounting of the
affairs of the Partnership, shall not be entitled to inspect the books or
records of the Partnership and shall not have any of the rights of a Partner
under the Act or this
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Agreement, including any voting rights granted under this Agreement. An
assignee of a Partnership Interest shall execute an instrument in form and
substance satisfactory to the Board of Directors agreeing to be bound by, and to
acquire the Partnership Interest subject to, the provisions of this Agreement.
9.4 Distributions and Allocations in Respect to Transferred Interests.
-----------------------------------------------------------------
If any Partnership Interest is Transferred (which, for purposes of this Section
9.4, shall not include a pledge, encumbrance or grant of a security interest)
during any Fiscal Year in compliance with the provisions of this Article IX, all
items of Profit and Loss attributable to the Transferred Partnership Interest
for such Fiscal Year shall be divided and allocated between the transferor and
the transferee by taking into account their varying Partnership Interests during
such Fiscal Year in accordance with Code Section 706(d), using any conventions
permitted by law and selected by the Executive Committee. All distributions on
or before the date of such Transfer shall be made to the transferor, and all
distributions thereafter shall be made to the transferee. Any Partnership
Interest that is transferred to a transferee pursuant to this Agreement whereby
the transferee is admitted as a substitute partner to the Partnership shall be
subject to the same terms and provisions under this Agreement in the hands of
the transferee as in the hands of the transferor.
9.5 Employee Common Partnership Appreciation Rights. The Board of
-----------------------------------------------
Directors may issue to employees of the Partnership certain rights to share in
the appreciation in the value of the Partnership from and after the Effective
Date; provided, that any
--------
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rights granted shall not, in the aggregate, exceed ten percent (10%) of any
appreciation in value of the Partnership from and after the Effective Date. Any
such rights are not, and shall not be deemed to be, Partnership Interests in the
Partnership, and no employees, by virtue of its ownership of such rights, shall
be or be deemed to be a Partner of the Partnership.
9.6 Termination of the Partnership. Except for Transfers of Partnership
------------------------------
Interests specifically permitted in this Agreement or an IPO Incorporation, no
Transfers of Partnership Interests shall be made if the effect of the Transfer
will be to terminate the Partnership pursuant to Section 708(b) of the Code or
any similar successor provision of the Code, or otherwise materially adversely
affect the Partnership or any other Partner under the Code.
ARTICLE X
DISSOLUTION AND WINDING UP
--------------------------
10.1 No Termination. Except as expressly provided in this Agreement, to
--------------
the fullest extent permitted by law, no Partner shall have the right, and each
Partner hereby agrees not, to dissolve, terminate or liquidate the Partnership.
No Partner shall have the right, and each Partner hereby agrees not, to petition
a court for the dissolution, termination or liquidation of the Partnership
except as such rights are provided in this Agreement or are available under
applicable law notwithstanding any agreement herein to the contrary.
10.2 Events of Dissolution. The Partnership shall dissolve and commence
---------------------
winding up and liquidating upon the first to occur of any of the following
("Liquidating Events"):
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10.2.1 Expiration. Expiration of the term of Partnership set forth
----------
in Section 2.4;
10.2.2 Executive Committee. The unanimous approval of the Executive
-------------------
Committee to dissolve the Partnership, but only on the effective date of
dissolution specified by the Executive Committee at the time of such approval;
10.2.3 Impossibility. The happening of any event that makes it
-------------
unlawful, impossible or impractical to carry on the business of the Partnership;
10.2.4 General Partner Withdrawal. The withdrawal, removal or
--------------------------
bankruptcy of a General Partner, the assignment by a General Partner of its
entire interest in the Partnership or any other event that causes a General
Partner to cease to be a general partner under the Act; provided, however, that
-------- -------
the Partnership shall not be dissolved and required to be wound up in connection
with any such events if (i) there is at least one remaining General Partner of
the Partnership who is hereby authorized to and does carry on the business of
the Partnership in accordance with this Agreement, or (ii) within 90 days after
the occurrence of such event, a majority in interest of the remaining Partners
holding Common Partnership Interests (or such greater percentage as is required
by the Act) agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of such event of one or more
additional General Partners of the Partnership;
10.2.5 Consent. The written agreement of all Partners of the
-------
Partnership; and
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10.2.6 Judicial Dissolution. The entry of a decree of judicial
--------------------
dissolution under Section 17-802 of the Act.
10.3 Winding Up. Upon the dissolution of the Partnership, the Partnership
----------
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. To the extent not inconsistent with the foregoing, all covenants and
obligations in this Agreement shall continue in full force and effect until such
time as the Partnership assets have been distributed pursuant to this Section
10.3 and the Certificate of Limited Partnership has been cancelled in accordance
with the Act. The Board of Directors shall be responsible for overseeing the
winding up and dissolution of the Partnership, shall take full account of the
Partnership's liabilities and assets, shall cause the Partnership property to be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and shall cause the proceeds therefrom, to the extent sufficient therefor, to be
applied and distributed in the following order:
10.3.1 To Creditors. First, to creditors of the Partnership,
------------
including Partners who are creditors, to the extent otherwise permitted by law,
in satisfaction of the liabilities of the Partnership (whether by payment or the
making or reasonable provision, including reserves, for payment thereof); and
10.3.2 To Partners. The balance, if any, to the General Partners
-----------
and the Limited Partners in accordance with Section 5.1.2.
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ARTICLE XI
NONCOMPETITION AGREEMENT
------------------------
11.1 Covenant Not to Compete.
-----------------------
11.1.1 Chartwell and Cardwell. As a separately bargained for
----------------------
commitment, so long as any affiliate of Chartwell Partners or Cardwell Partners
continues as a Partner, or shareholder, partner or Affiliate of any Partner in
the Partnership or holds directly or indirectly any Partnership Interest or
Shares in the Corporation, or is an officer or employee of the Partnership, and
for the Non-Compete Period after termination of any direct or indirect ownership
interest in the Partnership or Shares in the Corporation, each of Chartwell
Partners and Cardwell Partners shall take such action as shall be required to
ensure that neither it nor they Affiliates shall (unless acting as an agent,
representative, consultant, contractor or employee of the Partnership), directly
or indirectly (i) own, manage, operate, finance, join, control or participate in
the ownership, management, operation, financing or control of, or be connected
as an officer, director, employee, partner, principal, agent, representative,
consultant, contractor, or otherwise (with or without compensation) with, or use
or permit his or its name to be used in connection with, any competitive
business within a radius of two hundred fifty (250) miles of any truck stopping
center or business location in which the Partnership conducted business during
such Partner's association with the Partnership, in competition with the
development of truck stopping centers, or (ii) solicit any
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customer, employee, vendor, supplier or business contact of the Partnership
regarding matters relating to the business of the Partnership or competition
with the business of the Partnership, or (iii) solicit any officer or employee
of the Partnership unless such officer or employee has been terminated by the
Partnership unilaterally and without cause. Notwithstanding the foregoing: (i)
Cardwell, Sr. or an entity directly or indirectly owned by him, may own, manage,
operate and finance the El Paso Truck Terminal, C&R Distributing, Inc. and
retain his interest in the franchisee which currently owns and operates four (4)
Petro Stopping Center franchises; and (ii) Affiliates of the Chartwell Partners
may own, manage and/or operate entities in its convenience store/gasoline sales
business.
11.1.2 Mobil. For so long as Mobil or any of its Affiliates own any
-----
Partnership Interests or Shares and thereafter during the Non-Compete Period,
neither Mobil nor its Affiliates shall directly purchase or own any Truck Stop
Chain (for purposes of this Article 11, defined as ten or more truck stops in
three or more states); provided, however, that neither Mobil nor its Affiliates
-------- -------
shall be precluded from, directly or indirectly, investing or otherwise
participating in a Truck Stop Chain as a consequence of a merger, acquisition or
joint venture with or of another entity whose principal business (i.e., based on
----
gross revenue) is not a Truck Stop Chain and, if an entity is acquired or joint
ventured in which a Truck Stop Chain is not the principal business, adequate
measures are put in place to protect the
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confidentiality and non-use of non-public Petro information (including but not
limited to (a) an internal Mobil Oil Corporation "Chinese wall" such that
employees of Mobil Oil Corporation and its Affiliates directly involved in the
management, strategic direction and operation of the competing truck stop chain
would not have access to the Partnership's confidential information and would
not be involved in the Partnership's business; and (b) Partnership Board of
Directors, Executive Committee and Operating Committee representatives of Mobil
(i) would not, if so requested by the Chartwell Partners and the Cardwell
Partners, participate in any strategic decision concerning Partnership business
to the extent the competing Truck Stop Chain's business is competitive with the
Partnership business and (ii) would be deemed to vote in the same manner as the
Chartwell Partners and Cardwell Partners representatives vote on any matter
referred to in clause (b)(i) above).
Neither Mobil nor its Affiliates shall, for so long as they own any
Partnership Interests and for two years thereafter, solicit any employee of the
Partnership unless such employee has been terminated by the Partnership
unilaterally and without cause.
11.1.3 Kirschner Non-Compete. For so long as Kirschner or any of
---------------------
its Affiliates own a Partnership Interest, and for a period of two years
thereafter, Kirschner and its Affiliates shall comply with the provisions of the
Covenant Not To Compete set forth in the Franchise Agreement dated December 29,
1995 between the Company and Bordentown Junction Truck Stop Joint Venture.
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<PAGE>
11.1.4 Reformation. In connection with the restrictive covenants
-----------
contained herein, the parties hereto agree that (a) the terms and conditions of
the restrictive covenants have been agreed by the parties hereto to be
reasonable, (b) the restrictive covenants were negotiated in good faith by the
parties hereto and would not achieve their intended purpose if they were on
different terms or for periods of time shorter than the periods of time provided
for herein or were applied in more restrictive geographical areas than are
provided for herein, (c) the business of the Partnership is highly competitive
and the restrictive covenants are material to the parties' willingness to enter
into this Agreement, and (d) the restrictive covenants are not more restrictive
than is necessary to protect the legitimate interests of the Partnership and the
parties hereto. In the event the provisions of this Section should ever be
deemed to exceed the time or geographic limitations or any other limitations
permitted by applicable law in any jurisdiction, they shall be deemed reformed
in that jurisdiction to the maximum extent permitted by applicable law.
11.2 Ownership in Publicly Traded Corporation. The foregoing covenant
----------------------------------------
shall not prohibit any Partner from owning less than a five (5) percent
ownership interest in any competitor which is a publicly held corporation.
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ARTICLE XII
CONVERSION TO CORPORATION
-------------------------
12.1 Conversion to Corporation for Public Offering.
---------------------------------------------
12.1.1 Chartwell Partners Demand. The Chartwell Partners at any
-------------------------
time may file a request in writing (the "Request") with the Board of Directors
that the Partnership be incorporated under the laws of the State of Delaware or
such other state as the Board of Directors may agree (the "Corporation"), but
solely for the purpose of effecting an initial public offering of the
Corporation's stock to be registered under the Securities Act (the "IPO
Incorporation"). The Partners, the Executive Committee and the Board of
Directors hereby approve the IPO Incorporation, effective as of such time as the
same shall be requested by the Chartwell Partners, and the Plan, subject only to
Section 12.1.6.
12.1.2 Opinion. The Request shall be accompanied by a letter from a
-------
reputable investment banking firm selected by the Chartwell Partners experienced
in effecting initial public offerings stating (a) that in the opinion of such
investment banking firm such a public offering will be reasonably likely to be
successfully completed, (b) the suggested capital structure for such Corporation
(i.e., the number of shares of common stock and preferred stock into which the
----
Partnership Interests should be converted), (c) the probable size of the
offering in terms of number of shares to be offered, the allocation of the
offering among the Corporation and its shareholders, and the likely price range
per share in the offering (the "Offering Amount"), and (d)
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that such firm is prepared to act as the managing underwriter in a "firm
commitment" underwriting of the shares, if completed. Such letter will not be a
binding commitment of the underwriter, it being understood by the parties that
any underwriter's commitment will be by way of a firm underwriting agreement in
customary form executed at the time and in the manner as is customary in initial
public offerings.
12.1.3 Plan. The Request shall also be accompanied by the proposed
----
Plan of Reorganization ("Plan") for conversion of the Partnership into a
Corporation, which shall contain such terms as the Chartwell Partners shall
reasonably determine to be appropriate, including the proposed form of
Certificate of Incorporation and Bylaws of the Corporation. The terms of any
such Plan shall require (a) that the Common Partnership Interests of each
Partner of the Partnership be converted into shares of one class of common stock
of the Corporation ("Common Stock") based on the conversion price determined
under Section 12.1.10 and without regard to voting and other differences in
rights among classes of Common Partnership Interests, (b) that the Preferred
Partnership Interests be converted into one or more classes of preferred shares
of the Corporation ("Preferred Stock", together with the Common Stock, the
"Shares") having a liquidation value equal to the Unrecovered Capital and any
unpaid and accrued Preferred Return with respect thereto, and generally with the
same economic terms as to priority, dividends and mandatory redemption as the
Preferred Partnership Interests, (c) except to the extent required by
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applicable law or the managing underwriter of the offering, the IPO
Incorporation and the conversion of Partnership Interests to Shares shall not
take place prior to the closing under the underwriting agreement, (d) to the
extent shares of Common Stock may be sold other than for the account of the
Corporation, the holders of Common Stock to be issued pursuant to the Plan shall
have the right to participate in the public offering pro rata to the number of
shares of stock to be received by them pursuant to the Plan but only if such
holders agree to participate in the underwriting on the same basis as other
selling shareholders, including but not limited to execution of the underwriting
agreement, (e) that the minimum number of directors of the Corporation shall be
six (6) and (f) the option provided for in Section 12.1.5.
12.1.4 Alternative Structures. The Chartwell Partners shall have
----------------------
the right to require alternative structures for an initial public offering or
for a transaction pursuant to Section 9.2.2, including but not limited to a
merger, consolidation, sale or transfer of all the assets of the Partnership, or
creation of a holding company structure, which may or may not involve the
conversion of the Partnership to a corporation. No such structural change
(whether an IPO Incorporation or an alternative structure) shall be effective
until the consummation of the transaction involving such IPO Incorporation,
alternative structure or Section 9.2.2 transaction.
12.1.5 Partner Securities Exchange. At the option of any Partner,
---------------------------
such Partner may exchange all the equity securities
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issued by it or its direct or indirect parent (instead of such Partner's
Partnership Interests) in exchange for the Shares, provided that: (a) such
Partner has no material assets or liabilities other than its Partnership
Interests; and (b) proper indemnities are provided to the Partnership and its
Affiliates by the recipient(s) of the Shares with respect to any liabilities of
the Partner at the time of such exchange.
All expenses in connection therewith, including any expenses reasonably
incurred by the Chartwell Partners and, with respect to the legal, investment
banking and accounting advisors selected by the Chartwell Partners, approved by
the Executive Committee, which approval shall not be unreasonably withheld in
respect of the Plan and the other matters described in this Section 12.1, shall
be paid or reimbursed by the Partnership.
12.1.6 Objection. If any of the Cardwell Partners shall object to
---------
the IPO Incorporation, then the Cardwell Partners may veto the IPO
Incorporation, in which event all of the Cardwell Partners (the "Purchasing
Partners") shall be jointly and severally obligated to purchase all or such part
of the Common Partnership Interests of the Chartwell Partners and Mobil and
Kirschner, who elect by written notice to the Partnership within sixty (60) days
of such objection to sell all or part of their Common Partnership Interests in
the Partnership (the "IPO Block Selling Partners") to the Purchasing Partners;
provided that, if the Request is made prior to January 30, 2000, the Cardwell
- -------- ----
Partners shall be obligated
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<PAGE>
to purchase only 50% of all the Common Partnership Interests of any IPO Block
Selling Partner.
12.1.7 Purchase. The purchase by the Purchasing Partners shall take
--------
place within one hundred twenty (120) days after the mailing of the Request (the
"Mailing"). The purchase price for the Partnership Interest of a Partner shall
be determined under Section 12.1.10, assuming for this purpose that the Offering
Amount is determined by the middle of the selling price range referenced in
Section 12.1.2(c) and by the estimated number of shares of Common Stock to be
offered as referenced in Section 12.1.2(c). In addition, all expenses
reasonably incurred by the Partners in respect of the Plan and the other matters
described in this Section 12.1 shall be paid or reimbursed by the Purchasing
Partners. The Partnership shall pay all direct and indirect transfer taxes
associated with the purchase and sale. Payment shall be in cash against
delivery of such documents of transfer as the Purchasing Partners may reasonably
request to transfer the Interests sold by the IPO Block Selling Partners free
and clear of all liens, claims, encumbrances and rights of third parties other
than any rights of first refusal or other purchase rights pursuant to this
Agreement.
12.1.8 Security. In order to secure the payment by the Purchasing
--------
Partners to the IPO Block Selling Partners, within ninety (90) days of the
Mailing, the Purchasing Partners shall execute a finance and security agreement
(for an amount not less than the purchase price as determined under Section
12.1.10) in the
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form provided by the IPO Block Selling Partners, and reasonably acceptable to
the Purchasing Partners, and deposit in escrow with a security agent selected by
the Chartwell Partners and reasonably acceptable to the Purchasing Partners,
documents of transfer in the form appended to the finance and security
agreement, executed in blank, with respect to the Partnership Interests held by
the Purchasing Partners.
12.1.9 Assistance. The Partnership shall provide the Chartwell
----------
Partners and its employees, attorneys, accountants, agents and investment
bankers ("Agents") all reasonable assistance as may be reasonably requested in
connection with the development of any proposal for an IPO Incorporation and
Plan, including but not limited to providing full access to the properties,
employees and books and records of the Partnership; provided, however, that the
-------- -------
Partnership shall have the right to require any such Partner and its Agents to
execute such confidentiality agreements as may be reasonably requested by the
Partnership.
12.1.10 Conversion Price. The IPO conversion price of any Partner's
----------------
Common Partnership Interest in the Partnership shall equal the net amount which
such Partner would receive if the assets of the Partnership were sold for their
gross fair market values as of the date of the IPO Incorporation, the
liabilities of the Partnership paid, and the net proceeds distributed in
accordance with Section 10.3.2. For purposes of applying this Section 12.1.10,
a sale of Partnership assets shall be deemed to have occurred, Profits, Losses
and other items arising from such deemed
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<PAGE>
sale will be allocated pursuant to Article IV, taking into account any
adjustments to Sharing Percentages which occur on or before the date of the IPO
Incorporation, and corresponding adjustments to the Partners' Capital Account
balances shall be made. For this purpose, the gross fair market value of all
Partnership assets shall be equal to the middle of the range of the Offering
Amount multiplied by the number of shares of common equity to be outstanding
immediately prior to the IPO plus all liabilities and Preferred Interests of the
Partnership. The Executive Committee shall compute such conversion price.
12.2 Registration Rights.
-------------------
12.2.1 Application. The provisions of this Section 12.2 shall apply
-----------
to any Partner of the Partnership who shall have the right to receive Common
Stock to be issued or who received Common Stock issued pursuant to the IPO
Incorporation. For purposes of this Section 12.2, such Partners are referred to
as a "Holder" or "Holders" of Common Stock of the Corporation, even though at
any particular time they are Partners and not yet holders of Common Stock, and
"Corporation" shall be deemed to include the Partnership prior to the transfer
of assets by the Partnership to the Corporation pursuant to the Plan.
12.2.2 Piggyback Registration Rights.
-----------------------------
(a) Rights to Piggyback. After the consummation of the IPO,
-------------------
if the Corporation otherwise proposes to register any Common Stock under the
Securities Act and the registration form to be used may be used for the
registration of
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the Registrable Securities (as defined below) (other than a Registration
Statement on Form S-8 or any similar successor forms) (a "Piggyback
Registration"), the Corporation will give written notice to all Holders of
Registrable Securities, at least 30 days prior to the anticipated filing date,
of its intention to effect such a registration, which notice will specify the
proposed offering price, the kind and number of securities proposed to be
registered, the distribution arrangements and such other information that at the
time would be appropriate to include in such notice. The Corporation will,
subject to subsection 12.2.3 below, include in such Piggyback Registration all
Registrable Securities with respect to which the Corporation has received
written requests for inclusion therein within 20 business days after the date of
delivery of the Corporation's notice; provided, however, that if, at any time
-------- -------
after giving written notice of its intention to register any securities and
prior to the effective date of the Registration Statement filed in connection
with such registration, the Corporation shall determine for any reason not to
register or to delay registration of such securities, the Corporation may, at
its election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not to
register, the Corporation shall be relieved of its obligation to register any
Registrable Securities under this Section 12.2 in connection with such
registration (but not from its obligation to pay the registration expenses
incurred in connection therewith) and (ii) in
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the case of a determination to delay registering, the Corporation shall be
permitted to delay registering any Registrable Securities under this Section
12.2 during the period that the registration of such other securities is
delayed. Except as may otherwise be provided in this Agreement, Registrable
Securities with respect to which such request for registration has been received
will be registered by the Corporation and offered to the public in a Piggyback
Registration pursuant to this Section 12.2.2 on the terms and conditions at
least as favorable as those applicable to the registration of shares of Common
Stock to be sold by the Corporation.
(b) Priority on Piggyback Registrations. If the managing
-----------------------------------
underwriter or underwriters, if any, advise the holders of Registrable
Securities in writing that in its or their reasonable opinion or, in the case of
a Piggyback Registration not being underwritten, the Corporation shall
reasonably determine (and notifies the holders of Registrable Securities of such
determination), after consultation with an investment banker of nationally
recognized standing, that the number or kind of securities proposed to be sold
in such registration (including Registrable Securities to be included pursuant
to subsection (a) above) will adversely affect the success of such offering, the
Corporation will include in such registration the number of securities, if any,
which, in the opinion of such underwriter or underwriters, or the Corporation,
as the case may be, can be sold as follows: (i) if such registration was
initiated by the
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Corporation, (A) first, the shares the Corporation proposes to sell and (B)
second, the Registrable Securities and other shares of Common Stock requested to
be included in such registration by the Holders thereof entitled to participate
in such registration; and (ii) if such registration was initiated as the result
of the exercise of a demand registration right of holders of Common Stock other
than the Holders (A) first, the shares of Common Stock requested to be included
in such registration by the demanding holders pro rata among those requesting
such registration on the basis of the number of shares of Common Stock requested
to be included and (B) second, the shares to be issued and sold by the
Corporation and shares held by Persons other than the demanding holders and
requested to be included in such registration. To the extent that the privilege
of including Registrable Securities or other shares of Common Stock in any
Piggyback Registration must be allocated among the Holders thereof pursuant to
clauses (i)(B) or (ii)(B) above, the allocation shall be made pro rata based on
the number of shares of Common Stock that each such participant shall have
requested to include therein.
(c) Selection of Underwriters. If any Piggyback Registration
-------------------------
is an underwritten offering, the Executive Committee will select a managing
underwriter or underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized standing.
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12.2.3 Demand Registration Rights.
--------------------------
(a) Right to Demand by the Shareholders. On any two occasions
-----------------------------------
after 270 days after the first registration of shares of Common Stock under the
Securities Act (other than any registrations on Form S-8 or any similar
successor form), any one or more initial Holders of Registrable Securities
(collectively, a "Demanding Group") may make a written request of the
Corporation for registration with the Commission, under and in accordance with
the provisions of the Securities Act, of all or part of their Registrable
Securities (a "Demand Registration"); provided, however, that (x) the
-------- -------
Corporation need not effect a Demand Registration unless such Demand
Registration shall include a number of Registrable Securities having an
estimated fair market value of $7,500,000 upon the receipt of notice of Demand
Registration (y) the Corporation may, if its Board of Directors determines in
the exercise of its reasonable judgment that to effect such Demand Registration
at such time would have an adverse effect on the Corporation, defer such Demand
Registration for a single period not to exceed 180 days, and (z) if the
Corporation elects to defer any Demand Registration pursuant to terms of this
sentence, no Demand Registration shall be deemed to have occurred for purposes
of this Agreement during the term of such deferral. Within 30 days after
receipt of the request for a Demand Registration, the Corporation will send
written notice (the "Notice") of such registration request and if a proper
request is made in accordance herewith, its intention to comply therewith, to
each of the other holders of
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Registrable Securities and, subject to subsection (c) below, the Corporation
will include in such registration all Registrable Securities of such Holder with
respect to which the Corporation has received written requests for inclusion
therein within 30 business days after the effectiveness of the Notice. All
requests made pursuant to this subsection (a) will specify the aggregate number
of Registrable Securities requested to be registered and will also specify the
intended methods of disposition thereof. For purposes of this Section
12.2.3(a), the Cardwell Partners shall be collectively deemed one Holder and the
Chartwell Partners shall be collectively deemed one Holder.
(b) Number of Demand Registrations. A Demand Registration
------------------------------
shall not be counted as a Demand Registration hereunder until such Demand
Registration has been declared effective by the Commission and maintained
continuously effective for a period of at least 90 days or such shorter period
when all Registrable Securities properly included therein have been sold in
accordance with such Demand Registration .
If the Corporation elects to issue and sell any equity securities pursuant
to any Registration Statement filed in connection with a Demand Registration,
then such Registration shall be deemed to be a Demand Registration solely for
purposes of determining the number of Demand Registrations granted by this
Agreement unless the Corporation's participation in the Registration Statement
reduces the number of equity securities
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which otherwise would have been sold by equity security holders pursuant to such
Registration Statement.
(c) Priority on Demand Registrations. If in any Demand
--------------------------------
Registration, the managing underwriter or underwriters thereof (or in the case
of a Demand Registration not being underwritten, in the opinion of the holders
of a majority of the Registrable Securities included therein), advise the
Corporation in writing that in its or their reasonable opinion the number of
securities proposed to be sold in such Demand Registration exceeds the number
that can be sold in such offering without having an adverse effect on the
success of the offering (including, without limitation, any impact on the
selling price or the number of shares that any participant may sell), the
Corporation will include in such registration only the number of securities
that, in the reasonable opinion of such underwriter or underwriters (or holders
of Registrable Securities, as the case may be) can be sold without having an
adverse effect on the success of the offering as follows: (i) first, the
Registrable Securities properly requested to be included in such Demand
Registration by the Holders thereof pro rata among those requesting such Demand
Registration on the basis of the number of Shares requested to be included, (ii)
second, the shares to be issued and sold by the Corporation and shares held by
Persons other than the holders of Registrable Securities and requested to be
included in such Demand Registration. To the extent that the privilege of
including shares of Common Stock in any Demand Registration must be allocated
among the Holders thereof
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pursuant to clause (ii) above, the allocation shall be made pro rata based on
the number of shares of Common Stock that each such participant shall have
requested to include therein.
(d) Selection of Underwriters. If a Demand Registration is an
-------------------------
underwritten offering, the Executive Committee will select a managing
underwriter or underwriters of recognized national standing to administer the
offering; provided, however, that such underwriter or underwriters must be
-------- -------
reasonably satisfactory to the holders of a majority of the Registrable
Securities to be included in such Demand Registration held by members of the
Demanding Group that initiated such Demand Registration. Only the Executive
Committee may approve of a demand registration without an underwriter.
12.2.4 Registration Procedures. With respect to any Piggyback
-----------------------
Registration or Demand Registration (generically, a "Registration"), the
Corporation will, subject to subsections 12.2.2(a)(ii) and 12.2.3(a) above, as
expeditiously as practicable:
(a) prepare and file with the Commission, a Registration
Statement or Registration Statements relating to the applicable Registration on
any appropriate form under the Securities Act, which form shall be available for
the sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with the Registration Statement as
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may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Common Stock owned
by them;
(d) use commercially reasonable efforts to register and
qualify the Common Stock covered by the Registration Statement under securities
or Blue Sky laws of such states as shall be reasonably requested by the Holders
or underwriters, provided that the Corporation shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states; and
(e) notify the selling holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose,
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<PAGE>
(iv) of the receipt by the Corporation of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and (v) of the happening of any event which makes any statement made in the
Registration Statement, the Prospectus or any document incorporated therein by
reference untrue or incomplete or which otherwise requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(f) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and to be in such denominations and registered in such names as the
managing underwriters may request at least two business days prior to any sale
of Registrable Securities to the underwriters;
(g) upon the occurrence of any event contemplated by
subsection (e)(v) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact necessary to
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<PAGE>
make the statements therein, in light of the circumstances under which they were
made, not misleading;
(h) provide a CUSIP number for all Registrable Securities,
not later than the effective date of the applicable Registration Statement;
The Corporation may require each seller of Registrable Securities as to
which any Registration is being effected to furnish to the Corporation such
information regarding the proposed distribution of such securities as the
Corporation may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Corporation of
the happening of any event of the kind described in subsection (e)(v) of this
subsection 12.2.4, such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement until such
holder's receipt of copies of the supplemented or amended Prospectus, or until
it is advised in writing (the "Advice") by the Corporation that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus, and,
if so directed by the Corporation, such Holder will deliver to the Corporation
(at the Corporation's expense) all copies, other than permanent file copies then
in such Holder's possession of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.
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<PAGE>
12.2.5 Restrictions on Public Sale.
---------------------------
(a) Public Sale by Holders of Registrable Securities. To the
------------------------------------------------
extent inconsistent with applicable law, each Holder whose Registrable
Securities are included in a Registration Statement, hereunder, if requested by
the managing underwriter or underwriters for such Registration, agrees not to
effect any public sale or distribution of Registrable Securities, including a
sale pursuant to Rule 144, during the 30 business days prior to, and during the
120 day period (or such shorter period as may be agreed to by such underwriters)
beginning on the effective date of a Registration Statement pursuant to such
Piggyback Registration or Demand Registration (except as part of such Piggyback
or Demand Registration).
(b) Other Registrations. If the Corporation has previously
-------------------
filed a Registration Statement with respect to Registrable Securities, and if
such previous Registration has not been withdrawn or abandoned, the Corporation
will not file or cause to be effected any other registration of any of its
Common Stock (or securities convertible into or exchangeable for, or options to
purchase, Common Stock) under the Securities Act (except on Form S-8 or any
similar successor form), whether on its own behalf or at the request of any
holder or holders of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), until a period of at least 90
days has elapsed from the effective date of such previous Registration;
provided, however, that if the holders of 50% or more of the aggregate number of
- -------- -------
Registrable
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<PAGE>
Securities included in such previous Registration shall agree in writing, such
period may be shortened by the Corporation but not to a period shorter than one
month.
12.2.6 Registration Expenses. All expenses incurred in connection
---------------------
with a registration, including all registration, filing and qualification fees,
printing and accounting fees, fees and disbursements of counsel shall be paid by
the Corporation, but excluding underwriting commissions and discounts applicable
to Common Stock offered by the Holders, taxes and legal and other professional
fees incurred by the Holders.
12.2.7 Indemnification.
---------------
(a) Indemnification by the Corporation. The Corporation
----------------------------------
agrees to indemnify and hold harmless each Holder (an "Indemnified
Stockholder"), to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendments or supplements thereto),
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages, liabilities or judgments (A) are caused
by any such untrue statement or omission or alleged untrue statement or omission
based upon information furnished in writing to the Corporation by any of the
Holders or their affiliates for use
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<PAGE>
therein or (B) with respect to any preliminary prospectus, result from the fact
that any of the Holders or their respective affiliates sold shares of Common
Stock to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus as amended or
supplemented, if the Corporation shall have previously furnished copies thereof
to the Stockholders or their respective partners in accordance with this
Agreement and the final prospectus, as amended or supplemented, would have
corrected such untrue statement or omission.
In case any action shall be brought against any of the Indemnified
Stockholders based upon any Registration Statement or Prospectus, or any
amendment or supplement thereto, and with respect to which indemnity may be
sought against the Corporation, such Indemnified Stockholder (or the Indemnified
Stockholder controlled by such controlling person) shall promptly notify the
Corporation in writing and the Corporation shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Stockholder and payment of all fees and expenses. Such Indemnified Stockholder
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the reasonable fees and expenses of such
counsel shall be paid by such Indemnified Stockholder, unless (i) the employment
of such counsel shall have been specifically authorized in writing by the
Corporation, (ii) the Corporation shall have failed to assume the defense and
employ counsel or (iii)
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<PAGE>
the named parties to any such action (including any impleaded parties) include
both such Indemnified Stockholder and the Corporation and such Indemnified
Stockholder shall have been advised by such counsel that it would be
inappropriate for the same counsel to represent the Indemnified Stockholder and
the Corporation, it being understood, however, that the Corporation shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for the
Indemnified Stockholders, which firm shall be designated in writing by the
Indemnified Stockholders and that all such fees and expenses reasonably incurred
shall be reimbursed as they are incurred. The Corporation shall not be liable
for any settlement of any such action effected without the written consent of
the Corporation, but if settled with the written consent of the Corporation, the
Corporation agrees, to the fullest extent permitted by law, to indemnify and
hold harmless any Indemnified Stockholder and any such controlling person from
and against any amounts payable pursuant to such written consent in connection
with such settlement. The Corporation shall not, without the prior written
consent of such Indemnified Stockholder, effect any settlement of any pending or
threatened proceeding in respect of which such Indemnified Stockholder is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Stockholder,
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<PAGE>
unless such settlement includes an unconditional release of such Indemnified
Stockholder from all liability on claims that are the subject matter of such
proceeding.
(b) Indemnification by Stockholders. Each selling
-------------------------------
Stockholder agrees to indemnify and hold harmless the Corporation and its
officers, directors, shareholders and Affiliates or, in each case other than an
Indemnifying Party or an Affiliate thereof, any person controlling the
Corporation within the meaning of Section 15 of the Act or Section 20 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), to the
same extent as the foregoing indemnity from the Corporation to each of the
selling Stockholders, but only with reference to information relating to such
selling Stockholder that was furnished in writing by such selling Stockholder
for use in any Registration Statement. In no event shall the liability of any
selling Stockholder hereunder be greater in amount than the dollar amount of the
proceeds received by such selling Stockholder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
12.2.8 Rule 144. The Corporation agrees that at all times after it
--------
has filed a Registration Statement pursuant to the requirement of the Securities
Act relating to any class of equity securities of the Corporation, it will file
in a timely manner all reports required to be filed by it pursuant to the
Securities Act and the Exchange Act and will take such further action as any
holder of Registrable Securities may reasonably request in order
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<PAGE>
that such holder may effect sales of Shares pursuant to Rule 144.
Notwithstanding the foregoing, the Corporation may deregister any class of its
equity securities under Section 12 of the Exchange Act or suspend its duty to
file reports with respect to any class of its securities pursuant to Section
15(d) of the Exchange Act if it is then permitted to do so pursuant to the
Exchange Act and the rules and regulations thereunder.
12.2.9 Participation in Underwritten Registrations. No Holder may
-------------------------------------------
participate in any underwritten Registration hereunder unless such Holder (a)
agrees to sell its Shares of Common Stock on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to select
or approve the underwriter pursuant to subsections 12.2.2(c) or 12.2.3(d) above,
and (b) accurately completes in a timely manner and executes all questionnaires,
powers of attorney, underwriting agreements and other documents customarily
required under the terms of such underwriting arrangements.
ARTICLE XIII
MISCELLANEOUS
-------------
Notwithstanding anything in the Act (including Section 17-305(b) of the
Act) or this Agreement to the contrary, to the fullest extent permitted by law,
no General Partner shall have the right to keep confidential from Mobil, in its
capacity as a Limited Partner of the Partnership, any confidential information
concerning the Partnership; provided, that, Mobil maintains the confidentiality
-------- ----
thereof.
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<PAGE>
13.1 Financial Reports. As soon as practicable after the end of
-----------------
each Fiscal Year, and after the end of each fiscal quarter, the Board of
Directors shall cause to be furnished to each Partner a financial report
regarding the Partnership's financial position, which shall include a balance
sheet, income statement and cash flow statement and such other or further data
deemed appropriate by the Board of Directors. Such report as of the end of each
Fiscal Year shall be audited.
13.2 Binding Effect. Except as otherwise provided in this
--------------
Agreement, every covenant, term and provision of this Agreement shall be binding
upon and inure to the benefit of the Partners and their respective heirs,
legatees, legal representatives, successors, transferees, and assigns.
13.3 Severability. Every provision of this Agreement is intended
------------
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
or legality of the remainder of this Agreement.
13.4 Governing Law. The laws of the State of Delaware (without
-------------
regard to conflict of law principles) shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the Partners.
13.5 Not for Benefit of Creditors. The provisions of this
----------------------------
Agreement are intended only for the regulation of relations among Partners and
between Partners and former or prospective Partners
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<PAGE>
and the Partnership. This Agreement is not intended for the benefit of non-
Partner creditors and no rights are granted to non-Partner creditors under this
Agreement.
13.6 Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts with the same effect as if all of the Partners had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
13.7 Sole and Absolute Discretion. Whenever in this Agreement an
----------------------------
Indemnified Person is permitted or required to make a decision (i) in its "sole
discretion" or "discretion", or under a similar grant of authority or latitude,
the Indemnified Person shall be entitled to consider only such interests and
factors as it desires and may consider its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors affecting
the Partnership or the Limited Partners, or (ii) in its good faith or under
another express standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different standards imposed by
this Agreement or by law or any other agreement contemplated herein.
13.8 FIRPTA. At least sixty (60) days prior to the date the
------
Partnership would be required, if it were a corporation, pursuant to Regulations
Section 1.897-2(c) to determine (a "Determination Date") whether it was a
"United States real property holding corporation" as defined in Code Section
897(c)(2) and Regulations Section 1.897-2, the Executive Committee shall
determine whether
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<PAGE>
the Partnership would, if it were a corporation, be considered a United States
real property holding corporation. Any costs of such determination shall be
borne by the Partnership as may reasonably be determined by the Executive
Committee. If the Executive Committee determines that the estimated fair market
value of the United States real property held by the Partnership relative to the
fair market value of the assets listed in Regulations Section 1.897-2(i), (ii)
and (iii) result in the Partnership, if it was a corporation, being
characterized as a United States real property holding corporation, the
Executive Committee, by unanimous vote, which vote shall not be unreasonably
withheld shall take such actions, as may be required to avoid such
characterization before the next occurring Determination Date. In the event the
Executive Committee does not unanimously agree to any such action, at least
thirty (30) days prior to the Determination Date the Chartwell Partners shall
have the right to Transfer all or a portion of their Partnership Interests to an
Affiliate or Affiliates; provided, that, if any such Transferor's Transfer would
-------- ----
have a material adverse effect on any Partner, such Transfer would require the
consent of the Partner so affected, which consent will not be unreasonably
withheld. The Executive Committee shall continuously monitor whether the
Partnership, if it was a corporation, would be characterized as United States
real property holding corporation and shall, consistent with the Purpose of the
Partnership, use commercially reasonable efforts to avoid such
characterizations.
-127-
<PAGE>
13.9 Certificates. Partnership Interests may, at the discretion
------------
of the Board of Directors, be evidenced by certificates or other written
instruments evidencing the same.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Amended and
Restated Limited Partnership Agreement to be duly executed as of the date first
above written.
PETRO, INC., a
Texas corporation
By: /s/ JAMES A. CARDWELL
-----------------------------
Name: James A. Cardwell, Sr.
Title: President
MARTHA E. CARDWELL /s/ JAMES A. CARDWELL
- ---------------------------- --------------------------------
[WIFE] James A. Cardwell, Sr.,
Individually
PETRO HOLDINGS GP CORP., a
Delaware corporation
By: /s/ TODD R. BERMAN
----------------------------
Name: Todd R. Berman
Title: President
PETRO HOLDINGS LP CORP.,
a Delaware corporation
By: /s/ TODD R. BERMAN
----------------------------
Name: Todd R. Berman
Title: President
JAJCO II, Inc., a Delaware
corporation
By: /s/ JAMES A. CARDWELL, JR.
----------------------------
Name: James A. Cardwell, Jr.
Title: President
JULIE A. CARDWELL /s/ JAMES A. CARDWELL, JR.
- ----------------------------- -------------------------------
[WIFE] James A. Cardwell, Jr.,
Individually
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<PAGE>
MOBIL LONG HAUL INC.,
a Delaware corporation
By: /s/ MARK A. SKOLNIK
----------------------------
Name: Mark A. Skolnik
Title: President
KIRSCHNER INVESTMENTS, a
Pennsylvania general
partnership
By: /s/ MICHAEL S. KIRSCHNER
----------------------------
Michael S. Kirschner, a
general partner
By: /s/ FREDERICK M. KIRSCHNER
----------------------------
Frederick M. Kirschner, a
general partner
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<PAGE>
ACKNOWLEDGMENT AND AGREEMENT OF SPOUSE
--------------------------------------
The undersigned Spouse of James A. Cardwell, Sr.,a Partner who is a
party to the Third Amended and Restated Limited Partnership Agreement dated as
of January 30, 1997 (the "Partnership Agreement") of Petro Stopping Centers,
L.P., a Delaware limited partnership, does hereby acknowledge and agree that
she:
1. Has read the foregoing Partnership Agreement;
2. Has been informed of and is familiar with the background of and the
reasons for the provisions of the Partnership Agreement, including without
limitation all of the option and transfer provisions described in Articles 9
and 12, whether or not such undersigned spouse holds a community property or
other spousal interest under any law;
3. Hereby consents to the terms and conditions of the foregoing
Agreement, including without limitation all of the option and transfer
provisions described in Articles 9 and 12, whether or not much undersigned
spouse holds a community property or other spousal interest under any local law;
4. Hereby agrees to be bound by any option which may arise upon the
occurrence with respect to his or her spouse, of any of the events set forth in
said Partnership Agreement and to cooperate fully and take all such action as
may be necessary to facilitate the exercise of any such option in accordance
with the Partnership Agreement, as it may be amended from time to time.
/s/ Martha E. Cardwell
______________________________
Martha E. Cardwell
<PAGE>
ACKNOWLEDGMENT AND AGREEMENT OF SPOUSE
--------------------------------------
The undersigned Spouse of J.A. Cardwell, Jr., a Partner who is a party
to the Third Amended and Restated Limited Partnership Agreement dated as of
January 30, 1997 (the Partnership Agreement") of Petro Stopping Centers, L.P., a
Delaware limited partnership, does hereby acknowledge and agree that she:
1. Has read the foregoing Partnership Agreement;
2. Has been informed and is familiar with the background of and the
reasons for the provisions of the Partnership Agreement, including without
limitation all of the option and transfer provisions described in Articles 9 and
12, whether or not such undersigned spouse holds a community property or other
spousal interest under any law;
3. Hereby consents to the terms and conditions of the foregoing
Agreement, including without limitation all of the option and transfer
provisions described in Articles 9 and 12, whether or not such undersigned
spouse holds a community property or other spousal interest under any local law;
4. Hereby agrees to be bound by any option which may arise upon the
occurrence with respect to his or her spouse, of any of the events set forth in
said Partnership Agreement and to cooperate fully and take all such action as
may be necessary to facilitate the exercise of any such option in accordance
with the Partnership Agreement, as it may be amended from time to time; and
5. Hereby agrees that as evidenced by the terms of the Second Addendum
to Post-Marital Agreement relating to JAJCO, II, Inc. and originally dated April
27, 1992, the undersigned spouse holds no community property or other spousal
interest in Petro Stopping Centers, L.P.
/s/ Julie Ann Cardwell
----------------------
Julie Ann Cardwell
<PAGE>
EXHIBIT 4.6
- --------------------------------------------------------------------------------
PETRO STOPPING CENTERS, L.P.
PETRO FINANCIAL CORPORATION
as Issuers,
and
STATE STREET BANK AND TRUST COMPANY
as Trustee
____________________
INDENTURE
Dated as of January 30, 1997
____________________
$135,000,000
10 1/2 % Senior Notes due 2007
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
1.1. Definitions........................................................ 1
1.2. Other Definitions.................................................. 26
1.3. Incorporation by Reference of Trust Indenture Act.................. 26
1.4. Rules of Construction.............................................. 27
ARTICLE II. THE NOTES
2.1. Dating; Incorporation of Form in Indenture......................... 27
2.2. Execution and Authentication....................................... 28
2.3. Registrar and Paying Agent......................................... 29
2.4. Paying Agent to Hold Money in Trust................................ 29
2.5. Noteholder Lists................................................... 30
2.6. Transfer and Exchange.............................................. 30
2.7. Replacement Notes.................................................. 31
2.8. Outstanding Notes.................................................. 31
2.9. Temporary Notes.................................................... 32
2.10. Cancellation....................................................... 32
2.11. Defaulted Interest................................................. 32
2.12. Deposit of Moneys.................................................. 33
2.13. CUSIP Number....................................................... 33
2.14. Book-Entry Provisions for Global Notes............................. 33
2.15. Special Transfer Provisions........................................ 34
ARTICLE III. REDEMPTION
3.1. Notices to Trustee................................................. 36
3.2. Selection by Trustee of Notes to Be Redeemed....................... 37
3.3. Notice of Redemption............................................... 37
3.4. Effect of Notice of Redemption..................................... 38
3.5. Deposit of Redemption Price........................................ 38
3.6. Notes Redeemed in Part............................................. 39
3.7. Optional Redemption................................................ 39
ARTICLE IV.COVENANTS
4.1. Payment of Notes................................................... 39
4.2. SEC Reports........................................................ 40
4.3. Waiver of Stay, Extension or Usury Laws............................ 40
4.4. Compliance Certificate............................................. 41
4.5. Taxes.............................................................. 42
4.6. Limitation on Debt................................................. 42
4.7. Limitation on Issuance and Sale of Capital Interests
in Restricted Subsidiaries....................................... 43
4.8. Limitation on Restricted Payments.................................. 43
4.9. Limitation on Asset Sales.......................................... 46
4.10. Limitation on Transactions with Affiliates......................... 48
4.11. Limitation on Liens................................................ 49
<PAGE>
4.12. [INTENTIONALLY OMITTED]............................................ 49
4.13. Limitation on Creation of Unrestricted Subsidiaries................ 49
4.14. Limitation on Dividends and Other Payments Affecting
Restricted Subsidiaries.......................................... 50
4.15. Limitation on Sale and Lease-Back Transactions..................... 51
4.16. Payments for Consent............................................... 51
4.17. Partnership and Corporate Existence................................ 52
4.18. Change of Control.................................................. 52
4.19. Maintenance of Office or Agency.................................... 53
4.20. Maintenance of Properties and Insurance............................ 54
ARTICLE V. SUCCESSOR CORPORATION
5.1. Limitation on Merger, Conveyance, Transfer and Lease............... 55
5.2. Successor Person Substituted....................................... 56
ARTICLE VI. DEFAULTS AND REMEDIES
6.1. Events of Default.................................................. 57
6.2. Acceleration....................................................... 59
6.3. Other Remedies..................................................... 59
6.4. Waiver of Past Defaults and Events of Default...................... 60
6.5. Control by Majority................................................ 60
6.6. Limitation on Suits................................................ 60
6.7. Rights of Holders to Receive Payment............................... 61
6.8. Collection Suit by Trustee......................................... 61
6.9. Trustee May File Proofs of Claim................................... 61
6.10. Priorities......................................................... 62
6.11. Undertaking for Costs.............................................. 62
6.12. Restoration of Rights and Remedies................................. 63
ARTICLE VII. TRUSTEE
7.1. Duties of Trustee.................................................. 63
7.2. Rights of Trustee.................................................. 64
7.3. Individual Rights of Trustee....................................... 65
7.4. Trustee's Disclaimer............................................... 65
7.5. Notice of Defaults................................................. 65
7.6. Reports by Trustee to Holders...................................... 66
7.7. Compensation and Indemnity......................................... 66
7.8. Replacement or Trustee............................................. 67
7.9. Successor Trustee by Consolidation,
Merger or Conversion............................................. 68
7.10. Eligibility; Disqualificaition..................................... 68
7.11. Preferential Collection of Claims Against Issuers.................. 68
7.12. Paying Agents...................................................... 68
ARTICLE VIII. AMENDMENT, SUPPLEMENT AND WAIVER
8.1. Without Consent of Holders......................................... 69
8.2. With Consent of Holders............................................ 70
8.3. Compliance with Trust Indenture Act................................ 71
8.4. Revocation and Effect of Consents.................................. 71
8.5. Notation on or Exchange of Notes................................... 72
8.6. Trustee To Sign Amendments, etc.................................... 72
ii
<PAGE>
ARTICLE IX. DISCHARGE OF INDENTURE; DEFEASANCE
9.1. Discharge of Indenture............................................. 72
9.2. Legal Defeasance................................................... 73
9.3. Covenant Defeasance................................................ 74
9.4. Conditions to Defeasance or Covenant Defeasance.................... 74
9.5. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.............. 76
9.6. Reinstatement...................................................... 77
9.7. Moneys Held by Paying Agent........................................ 77
9.8. Moneys Held by Trustee............................................. 77
ARTICLE X. GUARANTEE OF NOTES
10.1. Guarantee.......................................................... 78
10.2. Execution and Delivery of Guarantees............................... 79
10.3. Limitation of Guarantee............................................ 80
10.4. Release of Guarantor............................................... 80
ARTICLE XI. MISCELLANEOUS
11.1. Trust Indenture Act Controls....................................... 81
11.2. Notices............................................................ 81
11.3. Communications by Holders with Other Holders....................... 82
11.4. Certificate and Opinion as to Conditions Precedent................. 82
11.5. Statements Required in Certificate and Opinion..................... 83
11.6. When Treasury Notes Disregarded.................................... 84
11.7. Rules by Trustee and Agents........................................ 84
11.8. Business Days; Legal Holidays...................................... 84
11.9. Governing Law...................................................... 84
11.10. No Adverse Interpretation of Other Agreements...................... 85
11.11. No Recourse Against Others......................................... 85
11.12. Successors......................................................... 86
11.13. Multiple Counterparts.............................................. 86
11.14. Table of Contents, Headings, etc................................... 86
11.15. Separability....................................................... 86
iii
<PAGE>
SCHEDULE 1 - PERMITTED AFFILIATE AGREEMENTS
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF LEGEND FOR GLOBAL NOTES
EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
EXHIBIT D - FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS PURSUANT TO REGULATION S
EXHIBIT E - FORM OF GUARANTEE
iv
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.8; 7.10
(b)(1) 7.10
(b)(9) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.5
(b) 11.3
(c) 11.3
313 (a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6; 11.2
(d) 7.6
314 (a) 4.2; 4.4; 11.2
(b) N.A.
(c)(1) 11.4; 11.5
(c)(2) 11.4; 11.5
(c)(3) N.A.
(d) N.A.
(e) 11.5
(f) N.A.
315 (a) 7.1; 7.2
(b) 7.5; 11.2
(c) 7.1
(d) 6.5; 7.1; 7.2
(e) 6.11
316 (a) (last sentence) 11.6
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
(b) 6.7
(c) 8.4
317 (a)(1) 6.8
(a)(2) 6.9
(b) 7.12
318 (a) 11.1
N.A. means Not Applicable
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NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
INDENTURE, dated as of January 30, 1997, between PETRO STOPPING CENTERS,
L.P., a Delaware limited partnership (the "Company") and PETRO FINANCIAL
CORPORATION, a Delaware corporation and wholly-owned subsidiary of the Company
("PFC" and, together with the Company, the "Issuers"), as Issuers, and State
Street Bank and Trust Company, a Massachusetts trust company, as Trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Issuers' 10 1/2% Senior Notes
due 2007 (the "Notes").
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
Section 1.1. Definitions.
-----------
"Acquired Debt" means Debt of a Person (including an Unrestricted
Subsidiary) existing at the time such Person becomes a Restricted Subsidiary or
assumed in connection with the acquisition of assets from such Person.
"Additional Interest" means additional interest on the Notes, which the
Issuers agree to pay pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Interest Expense" means, for any period, without duplication, an
amount equal to the sum of: (i) the aggregate amount of interest charges
(excluding fees and expenses incurred at or prior to the closing of the Offering
in connection with the Transactions), whether expensed or capitalized, incurred
or accrued by the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period (including non-cash
interest payments); plus (ii) to the extent not included in clause (i) above, an
amount equal to the sum of: (A) net costs associated with Interest Swap
Obligations and Currency Hedge Obligations (including any amortization of
discounts); plus (B) all commissions, discounts and other fees and charges owed
with respect to letters of credit, bankers' acceptances or similar facilities
paid or accrued, or scheduled to be paid or accrued, during such period; plus
(C) dividends on Preferred Interests and Redeemable Capital Interests (if paid
to a Person other than the Company or one of its Restricted Subsidiaries)
declared and payable in cash; plus (D) the portion of any Attributable Debt in
respect of any Sale and Leaseback Transaction that is allocable to interest
expense (determined as if such Transaction were treated as a Capital Lease
Obligation); plus (E) to the extent any Debt of any other Person is Guaranteed
or secured by the Company or a Restricted Subsidiary in the manner described in
clause (ix) of the definition of "Debt," the aggregate amount of interest
expense of such other Person during such period attributable to any such Debt
determined in accordance with GAAP; minus (F) amortization
<PAGE>
or write-off of deferred financing costs during such period and any charge
related to any premium or penalty paid in connection with redeeming or retiring
any Debt of the Company and its Restricted Subsidiaries prior to the Stated
Maturity thereof. For purposes of calculating Adjusted Interest Expense on a pro
forma basis, the interest on Debt bearing a floating rate of interest shall be
the interest rate in effect at the time of determination (taking into account on
a pro forma basis any Interest Swap Obligation applicable to such Debt if such
Interest Swap Obligation has a remaining term at the date of determination in
excess of 12 months).
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities and after giving effect to any collection from any
Subsidiary of such Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding Debt in respect of the Guarantee, as they become
absolute and matured.
"Adjusted Net Income" means, for any period, the consolidated net income
(or net loss) of the Company and its Restricted Subsidiaries determined in
accordance with GAAP for such period minus (to the extent made or reserved)
Permitted Tax Distributions, plus any Permitted Tax Distributions repaid to the
Company; provided that there shall be excluded therefrom, without duplication:
(i) all items classified as extraordinary, unusual or nonrecurring (including
fees and expenses incurred at or prior to Closing and write-offs, in each case
in connection with the Transactions); (ii) any net loss or net income of any
Person that is not a Restricted Subsidiary, except to the extent of the amount
of dividends or other distributions actually paid to the Company or its
Restricted Subsidiaries by such other Person during such period; (iii) the net
income of any Person acquired by the Company or a Restricted Subsidiary thereof
in a pooling-of-interests transaction for any period prior to the date of such
acquisition; (iv) any gain or loss, net of taxes, realized on the termination of
any employee pension benefit plan; (v) gains (but not losses) in respect of
Asset Sales by the Company or its Restricted Subsidiaries; (vi) the net income
(but not the net loss) of any Restricted Subsidiary to the extent that the
payment of dividends or distributions to such Person is restricted, directly or
indirectly, except to the extent that such net income could be paid to the
Company or a Restricted Subsidiary thereof by loans, advances, intercompany
transfers, principal repayments or otherwise; and (vii) with
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regard to any Restricted Subsidiary all of the Capital Interests which are not
owned by the Company or another Restricted Subsidiary, any aggregate net income
(or loss) in excess of the Company's or such other Restricted Subsidiary's pro
rata share of such Restricted Subsidiary's net income (or loss). In computing
Adjusted Net Income under Section 4.8(a)(iii) hereof, the Company (i) shall use
audited financial statements for the portion of the relevant period for which
such statements are available on the date of determination and unaudited
financial statements and other current financial data based on the books and
records of the Company for the remaining portion of such period and (ii) shall
be permitted to rely in good faith for the balance of the relevant period for
which audited financial statements are not available on the financial statements
and other financial data derived from the books and records of the Company that
are available on the date of determination.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings that correspond to the foregoing. For purposes of
this Indenture, the term "Affiliate", as it relates to the Company, shall
include Mobil Oil for so long as Mobil Oil is entitled to designate at least one
member of the Board of Directors of the Company.
"Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands.
"Asset Sale" means any transfer, conveyance, sale, lease or other
disposition (including, without limitation, dispositions pursuant to any
consolidation or merger) by the Company or any of its Restricted Subsidiaries to
any Person (other than to the Company or one or more of its Restricted
Subsidiaries) in any single transaction or series of transactions of: (i)
Capital Interests in another Person (other than directors' qualifying shares);
(ii) any other Property or assets (other than in the ordinary course of
business, including any sale or other disposition of obsolete or permanently
retired equipment); provided, however, that the term "Asset Sale" shall exclude:
(a) any asset disposition permitted by the provisions of Section 5.1 hereof that
constitutes a disposition of all or substantially all of the assets of the
Issuers and their Restricted Subsidiaries taken as a whole; (b) any transfer,
conveyance, sale, lease or other disposition of Property or assets, the gross
proceeds of which (exclusive of indemnities) do not exceed $500,000; (c) sales
of Eligible Cash Equivalents; (d) the Incurrence of any Lien, to the extent not
prohibited by the terms of this Indenture; and (e) sales of Unrestricted
Subsidiaries. For purposes of this definition, any series of
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related transactions that, if effected as a single transaction, would constitute
an Asset Sale, shall be deemed to be a single Asset Sale effected when the last
such transaction which is a part thereof is effected.
"Asset Swap" means any exchange of Property or assets of the Company or any
Restricted Subsidiary of the Company for property or assets of a third party
which consist of property or assets described in clause (d) of the definition of
"Permitted Investments."
"Attributable Debt" under this Indenture in respect of a Sale and Leaseback
Transaction means, as at the time of determination, the greater of (i) the fair
value of the Property subject to such arrangement (as determined in good faith
by the Board of Directors) and (ii) the present value (discounted at the rate of
interest implicit in such transaction) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of any date of determination, with respect to any
Debt, the quotient obtained by dividing (i) the sum of the products of (x) the
number of years from the date of determination to the dates of each successive
scheduled principal payment (including any sinking fund or mandatory redemption
payment requirements) of such Debt multiplied by (y) the amount of such
principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means (i) with respect to the Company or any other
Restricted Subsidiary, its Board of Directors; (ii) with respect to a
corporation, the board of directors of such corporation or any duly authorized
committee thereof; and (iii) with respect to any other entity, the board of
directors or similar body of the general partner or managers of such entity or
any duly authorized committee thereof.
"Board Resolution" means, as to any Person, a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of such Person, and to be in full force and effect, and, if required
hereunder, delivered to the Trustee.
"Capital Interests" in any Person means any and all shares, interests
(including Preferred Interests), participations or other equivalents in the
equity interest (however designated) in such Person and any rights (other than
Debt securities convertible into an equity interest), warrants or options to
acquire an equity interest in such Person.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of
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(or other Debt arrangement conveying the right to use) real or personal Property
of such Person, to the extent such obligations are required to be classified and
accounted for as a capital lease or a liability on the face of a balance sheet
of such Person in accordance with GAAP. The Stated Maturity of any Capital Lease
Obligation shall be the date of the last payment of rent or any other amount due
under such lease (or other Debt arrangement) prior to the first date upon which
such lease (or other Debt arrangement) may be terminated by the user of such
real or personal Property without payment of a penalty, and the amount of any
Capital Lease Obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cardwell Group" means James A. Cardwell, Sr., James A. Cardwell, Jr. and
their Affiliates.
"Change of Control" means the occurrence of any of the following events:
(i) prior to a Public Equity Offering, either (A) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of a greater percentage of the
Common Interests in the Company than such percentage constituting the
"beneficial ownership" of the Permitted Holders in the aggregate or (B) any
"person" or "group" other than the Permitted Holders has the power or right to
designate a majority of the members of the Company's Board of Directors; (ii)
after the consummation of a Public Equity Offering, (A) the Permitted Holders
and the Cardwell Group, in the aggregate, cease to be the "beneficial owner",
directly or indirectly, of at least 50% of the Common Interests in the Company
or any Successor Entity (on a fully-diluted basis) and (B) the Permitted Holders
in the aggregate cease to be the "beneficial owner", directly or indirectly, of
at least 30% of the Common Interests in the Company or any Successor Entity;
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by the Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors of the Company then still in office 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 66-2/3% of the Company's Board of Directors then in office; or (iv)
the Company sells, conveys, transfers or leases (either in one transaction or a
series of related transactions) all or substantially all of its assets to a
Person other than a Restricted Subsidiary of the Company or a Successor Entity
in which a majority or more of the voting power of the Voting Interests is held
by the Permitted Holders.
"Chartwell" means Chartwell Investments Inc. and its Affiliates.
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<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Interests" of any Person means Capital Interests in such Person that
do not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to Capital Interests of any other class in such Person.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor(s) replaces such party pursuant to Article V of this
Indenture and, thereafter, means the successor.
"Company Request" means any written request signed in the name of the
Company and PFC by an Officer of each of the Company and PFC.
"Consolidated Net Worth" of the Company means, as of any date, the aggregate
of capital, surplus and retained earnings of the Company and Restricted
Subsidiaries as would be shown on a consolidated balance sheet of the Company
and its Restricted Subsidiaries prepared as of such date in accordance with
GAAP, less all amounts, if any, attributable to Redeemable Capital Interests in
such Person.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at Two
International Place, Fourth Floor, Boston, Massachusetts 02110.
"Credit Agreement" means a secured or unsecured credit agreement providing,
inter alia, for revolving credit loans, term loans and/or letters of credit
between the Company and one or more lenders, together with all related notes,
letters of credit, collateral documents, guarantees, and any other related
agreements and instruments executed and delivered in connection therewith, in
each case as amended, modified, supplemented, refinanced, refunded or replaced
in whole or in part from time to time.
"Currency Hedge Obligations" means the obligations of a Person Incurred
pursuant to any foreign currency exchange agreement, option or futures contract
or other similar agreement or arrangement designed to protect against or manage
such Person's exposure to fluctuations in foreign currency exchange rates on
Debt permitted under this Indenture.
"Debt" means at any time (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, or non-
recourse, and whether or not contingent, the following: (i) all Debt of such
Person for money borrowed, excluding any trade payables, other current
liabilities incurred in the ordinary course of business and any
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liability for federal, state or local income taxes or other taxes owed by such
Person; (ii) all obligations (other than interest, premium and additional
payments, if any) of such Person evidenced by bonds, debentures, notes, or other
similar instruments; (iii) all obligations of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person; (iv) all Debt created or arising under any conditional
sale or other title retention agreement with respect to Property or assets
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such Property or assets); (v) all Capital Lease Obligations of such Person;
(vi) the maximum fixed redemption or repurchase price of Redeemable Capital
Interests in such Person at the time of determination; (vii) any Interest Swap
Obligations and Currency Hedge Obligations of such Person at the time of
determination; (viii) Attributable Debt with respect to any Sale and Leaseback
Transaction to which such Person is a party; and (ix) all obligations of the
types referred to in clauses (i) through (viii) of this definition of another
Person and all dividends and other distributions of another Person, the payment
of which, in either case, (A) such Person has Guaranteed or (B) is secured by
(or the holder of such Debt or the recipient of such dividends or other
distributions has an existing right, whether contingent or otherwise, to be
secured by) any Lien upon the Property or other assets of such Person, even
though such Person has not assumed or become liable for the payment of such
Debt, dividends or other distributions. For purposes of the foregoing: (a) the
maximum fixed repurchase price of any Redeemable Capital Interests that do not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Interests as if such Redeemable Capital Interests
were repurchased on any date on which Debt shall be required to be determined
pursuant to this Indenture; provided, however, that, if such Redeemable Capital
Interests are not then permitted to be repurchased, the repurchase price shall
be the book value of such Redeemable Capital Interests; (b) the amount
outstanding at any time of any Debt issued with original issue discount is the
principal amount of such Debt less the remaining unamortized portion of the
original issue discount of such Debt at such time as determined in conformity
with GAAP, but such Debt shall be deemed Incurred only as of the date of
original issuance thereof; (c) the amount of any Debt described in clause
(ix)(A) above shall be the maximum liability under any such Guarantee; and (d)
the amount of any Debt described in clause (ix)(B) above shall be the lesser of
(I) the maximum amount of the obligations so secured and (II) the Fair Market
Value of such Property or other assets. Debt of the Company shall include the
Debt Warrants.
"Debt Warrants" means the exchangeable debt warrants of the Company and PFC
issued with the Existing Notes.
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<PAGE>
"Default" means any event that is, or after notice or passage of time, or
both, would be, any Event of Default.
"Depository" means, with respect to the Notes issued in the form of one or
more Global Notes, The Depository Trust Company or another Person designated as
Depository by the Company, which Person must be a clearing agency registered
under the Exchange Act.
"Disinterested Director" means, with respect to any proposed transaction
between (i) the Company or a Restricted Subsidiary, as applicable, and (ii) an
Affiliate thereof (other than the Company or a Restricted Subsidiary), a member
of the Board of Directors of the Company or such Restricted Subsidiary, as
applicable, who would not be a party to, or have a financial interest in, such
transaction and is not an officer, director or employee of, and does not have a
financial interest in, such Affiliate. For purposes of this definition, no
person would be deemed not to be a Disinterested Director solely because such
person holds Capital Interests in the Company.
"EBITDA" means, with respect to the Company and its Restricted Subsidiaries,
for any period, the sum of Adjusted Net Income plus, to the extent reflected in
Adjusted Net Income for such period from which Adjusted Net Income is
determined, without duplication, (i) Adjusted Interest Expense, (ii) income tax
expense (or Permitted Tax Distributions in lieu thereof), (iii) depreciation
expense, (iv) amortization expense, (v) any charge related to any premium or
penalty paid in connection with redeeming or retiring any Debt prior to its
Stated Maturity and (vi) any other non-cash items reducing Adjusted Net Income;
minus any non-cash items increasing Adjusted Net Income.
"Eligible Bank" means a bank or trust company (including the Trustee in its
corporate capacity) (i) that is organized and existing under the laws of the
United States of America or Canada, or any state, territory, province or
possession thereof, (ii) that as of the time of the making or acquisition of an
Investment in such bank or trust company, has combined capital and surplus in
excess of $500,000,000 and (iii) the senior Debt of which is rated at least "A-
2" by Moody's or at least "A" by Standard & Poor's.
"Eligible Cash Equivalents" means any of the following Investments: (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof) maturing not more
than one year after the date of acquisition; (ii) time deposits in and
certificates of deposit of any Eligible Bank, provided that such Investments
have a maturity date not more than two years after date of acquisition and that
the Average Life of all such Investments is one year or less from the respective
dates of acquisition; (iii) repurchase obligations
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with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with any Eligible Bank; (iv) direct
obligations issued by any state of the United States or any political
subdivision or public instrumentality thereof, provided that such Investments
mature, or are subject to tender at the option of the holder thereof, within 90
days after the date of acquisition and, at the time of acquisition, have a
rating of at least A from Standard & Poor's or A-2 from Moody's (or an
equivalent rating by any other nationally recognized rating agency); (v)
commercial paper of any Person (including the bank holding company of the
Trustee) other than an Affiliate of the Company, provided that such Investments
have one of the two highest ratings obtainable from either Standard & Poor's or
Moody's and mature within 90 days after the date of acquisition; (vi) overnight
and demand deposits in and bankers' acceptances of any Eligible Bank and demand
deposits in any bank or trust company to the extent insured by the Federal
Deposit Insurance Corporation against the Bank Insurance Fund; and (vii) money
market funds substantially all of the assets of which comprise Investments of
the types described in clauses (i) through (vi).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Notes" means the 12 1/2% Senior Notes due 2002 of the Company and
PFC (including Existing Notes issuable in connection with the Debt Warrants).
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase."
"Fair Market Value" means, with respect to the consideration received or
paid in any transaction or series of transactions, the fair market value thereof
as determined in good faith by the Board of Directors.
"Franchisee Receivables" means fuel, lube, repair and other receivables
purchased by the Company or any Restricted Subsidiary from any of their
franchisees, licensees or third party contractors operating a Stopping Center
affiliated with the Company's network of Stopping Centers.
"Fuel Hedging Obligations" means the obligations of a Person pursuant to
fuel price swap, fuel price cap, fuel price collar and fuel price floor and
similar agreements and hedging obligations and arrangements, in the ordinary
course of business, designed to protect against or manage such Person's exposure
to fluctuations in fuel prices.
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<PAGE>
"GAAP" means generally accepted accounting principles in the United States,
consistently applied, as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination.
"Guarantee" means, as applied to any Debt of another Person, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such Debt, (ii) any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the effect of guaranteeing the
Debt of any other Person in any manner and (iii) an agreement of a Person,
direct or indirect, contingent or otherwise, the practical effect of which is to
assure in any way the payment or performance (or payment of damages in the event
of non-performance) of all or any part of such Debt of another Person (and
"Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings that correspond
to the foregoing).
"Guarantor" means any future direct or indirect Significant Subsidiary of
the Company and each Restricted Subsidiary of the Company that hereafter becomes
a Guarantor pursuant to Section 10.1 hereof, pursuant to its execution of a
supplemental indenture to this Indenture relating to its Guarantee; "Guarantors"
means such entities, collectively.
"Holder" or "Noteholder" means a Person in whose name a Note is registered
in the security register.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt or
other obligation on the balance sheet of such Person; provided, however, that a
change in GAAP that results in an obligation of such Person that exists at such
time becoming Debt shall not be deemed an Incurrence of such Debt. Debt
otherwise Incurred by a Person before it becomes a Subsidiary of the Company
shall be deemed to be Incurred at the time at which such Person becomes a
Subsidiary of the Company. With respect to Debt the proceeds of which are to be
used solely to develop one or more Stopping Centers and to be borrowed pursuant
to a binding commitment previously entered into in good faith with a lending
institution, the Company or any Restricted Subsidiary shall, at its election, be
deemed to have Incurred Debt in a designated amount of up to the completion cost
of the project, based on the good faith estimate of management in accordance
with past practices and certified and so designated to the Trustee in an
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Officers' Certificate, including a Board Resolution, at the time of such
designation, but only to the extent such proceeds are actually borrowed within
365 days after such delivery date, in which case the excess of the committed
amount over the amount actually borrowed shall not be deemed Incurred for the
purposes of this definition. "Incurrence," "Incurred," "Incurable" and
"Incurring" shall have meanings that correspond to the foregoing. A Guarantee
by the Company or a Restricted Subsidiary of Debt incurred by the Company or a
Restricted Subsidiary, as applicable, shall not be a separate incurrence of
Debt.
"Indenture" means this Indenture as amended, restated or supplemented from
time to time.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
promulgated under the Securities Act.
"Interest Coverage Ratio" means, at any date of determination, the ratio of:
(i) EBITDA to (ii) Adjusted Interest Expense, in both cases for the Specified
Period.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of a Person pursuant to
any interest rate swap agreement, interest rate cap, collar or floor agreement
or other similar agreement or arrangement designed to protect against or manage
such Person's exposure to fluctuations in interest rates on Debt permitted under
this Indenture.
"Investment" by any Person means any direct or indirect loan, advance (or
other extension of credit) or capital contribution to (by means of any transfer
of cash or other Property or assets to another Person or any other payments for
Property or services for the account or use of another Person), including
without limitation the following: (i) the purchase or acquisition of any
Capital Interest or other evidence of beneficial ownership in another Person;
(ii) the purchase, acquisition or Guarantee of the Debt of another Person or the
issuance of a "keep well" with respect thereto; and (iii) the purchase or
acquisition of the business or assets of another Person; but shall exclude: (a)
accounts receivable and other extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices; (b) the acquisition
of Property and assets from suppliers and other vendors in the ordinary course
of business; and (c) prepaid expenses and workers' compensation, utility, lease
and similar deposits, in the ordinary course of business.
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"Issue Date" means the date the Notes are first issued by the Issuers and
authenticated by the Trustee under this Indenture.
"Issuers" means the Company and PFC.
"Lien" means, with respect to any Property or other asset any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien (statutory or otherwise), charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property or other asset
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Maturity Date" means February 1, 2007.
"Mobil Oil" means Mobil Oil Corporation and its Affiliates.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to Asset Sales of any Person, cash
and Eligible Cash Equivalents received net of: (i) all reasonable out-of-pocket
expenses of such Person incurred in connection with such a sale, including,
without limitation, all legal, title and recording tax expenses, commissions and
other fees and expenses incurred and all federal, state, foreign and local taxes
arising in connection with such an Asset Sale that are paid or required to be
accrued as a liability under GAAP by such Person, and Permitted Tax
Distributions attributable thereto; (ii) all payments made by such Person on any
Debt that is secured by such Properties or other assets in accordance with the
terms of any Lien upon or with respect to such Properties or other assets or
that must, by the terms of such Lien or such Debt, or in order to obtain a
necessary consent to such transaction or by applicable law, be repaid to any
other Person (other than the Company or a Restricted Subsidiary thereof) in
connection with such Asset Sale; and (iii) all contractually required
distributions and other payments made to minority interest holders in Restricted
Subsidiaries of such Person as a result of such transaction; provided, however,
that: (a) in the event that any consideration for an Asset Sale (which would
otherwise constitute Net Cash Proceeds) is required by (I) contract to be held
in escrow pending determination of whether a purchase price adjustment will be
made or (II) GAAP to be reserved against other liabilities in connection with
such Asset Sale, such consideration (or any portion thereof) shall become Net
Cash Proceeds only at such time as it is released to such Person from escrow or
otherwise; and (b) any non-cash consideration received in connection with any
transaction, which is subsequently
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converted to cash, shall become Net Cash Proceeds only at such time as it is so
converted.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.
"Notes" means the securities that are issued under this Indenture, as
amended or supplemented from time to time pursuant to this Indenture.
"Obligations" means, with respect to any Debt, any principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
expenses payable under the documentation governing such Debt.
"Offering" means the offering of the Notes as described in the Offering
Memorandum.
"Offer" has the meaning set forth in the definition of "Offer to Purchase."
"Offer to Purchase" means a written offer (the "Offer") sent by the Issuers
by first class mail, postage prepaid, to each Holder at his or its address
appearing in the security register on the date of the Offer offering to purchase
up to the aggregate principal amount of Notes set forth in such Offer at the
purchase price set forth in such Offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 60 days after the date of mailing of such Offer and a
settlement date (the "Purchase Date") for purchase of Notes within five Business
Days after the Expiration Date. The Issuers shall notify the Trustee at least
15 days (or such shorter period as is acceptable to the Trustee) prior to the
mailing of the Offer of the Issuers' obligation to make an Offer to Purchase,
and the Offer shall be mailed by the Issuers or, at the Issuers' request, by the
Trustee in the name and at the expense of the Issuers. The Offer shall contain
all instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes offered to
be purchased pursuant to the Offer to Purchase (including, if less than
100%, the manner by which such amount has been determined pursuant to
Indenture
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covenants requiring the Offer to Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Issuers for each $1,000
principal amount of Notes accepted for payment (as specified pursuant to
this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that, unless the Issuers default in making such purchase, any Note
accepted for purchase pursuant to the Offer to Purchase will cease to
accrue interest after the Purchase Date, but that any Note not tendered or
tendered but not purchased by the Issuers pursuant to the Offer to Purchase
will continue to accrue interest at the same rate;
(8) that, on the Purchase Date, the Purchase Price will become due and
payable upon each Note accepted for payment pursuant to the Offer to
Purchase;
(9) that each Holder electing to tender a Note pursuant to the Offer
to Purchase will be required to surrender such Note at the place or places
set forth in the Offer prior to the close of business on the Expiration
Date (such Note being, if the Issuers or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Notes tendered if the Issuers (or their paying agent) receive, not later
than the close of business on the Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
aggregate principal amount of the Notes the Holder tendered, the
certificate number of the Note the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender;
(11) that (a) if Notes having an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Issuers shall purchase all such
Notes and (b) if Notes having an aggregate principal amount in excess of
the Purchase Amount are tendered and not withdrawn pursuant to the Offer to
Purchase, the Issuers shall purchase Notes
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having an aggregate principal amount equal to the Purchase Amount on a pro
rata basis (with such adjustments as may be deemed appropriate so that only
Notes in denominations of $1,000 principal amount or integral multiples
thereof shall be purchased); and
(12) that, in the case of any Holder whose Note is purchased only in
part, the Issuers shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in the
aggregate principal amount equal to and in exchange for the unpurchased
portion of the aggregate principal amount of the Notes so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Offering Memorandum" means the Offering Memorandum dated January 23, 1997,
pursuant to which the Notes were offered.
"Officer" means, with respect to any Person, the Chairman, the President,
the Chief Executive Officer, the Chief Operating Officer, any Vice President,
the Chief Financial Officer, the Controller, the Chief Accounting Officer, the
Treasurer or the Secretary of such Person (or, in the case of a Person that is a
partnership, a general partner of such Person in such capacity).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman, the President, the Chief Executive Officer, the Chief
Operating Officer or any Vice President and the Chief Financial Officer, the
Controller, the Chief Accounting Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion from legal counsel, which
counsel is reasonably acceptable to the Trustee.
"Permitted Affiliate Agreements" means the agreements between and among the
Company and each of the Cardwell Group, Mobil Oil and Chartwell, listed on
Schedule 1 to this Indenture in effect immediately after the initial issuance of
the Notes and as the same may be amended from time to time subject to the
provisions of Section 4.10 hereof, provided that, notwithstanding such covenant,
such agreements may be extended from time to time or otherwise amended, to the
extent the Board of Directors of the Company has determined in good faith that
no material adverse effect on the creditworthiness of the Company and its
Restricted Subsidiaries, taken as a whole, shall result as a consequence
thereby.
"Permitted Debt" means (i) Debt Incurred pursuant to the Credit Agreement
(other than pursuant to Section 4.6(a) hereof or pursuant to clause (xiv) of
this definition) in an aggregate
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principal amount not to exceed $75,000,000 at any one time outstanding, less (x)
the aggregate amount of all Net Cash Proceeds from any Asset Sale that have been
applied to permanently reduce the outstanding amount of Debt under such Credit
Agreement borrowed under this clause (i) and (y) the amount of Existing Notes
outstanding upon the closing of the Transactions, plus Debt Incurred to redeem
such Existing Notes; (ii) Debt outstanding under the Notes and the Existing
Notes and contribution, indemnification and reimbursement obligations owed by
any Issuer or any Guarantor to any of the other of them in respect of amounts
paid or payable on such Notes and Existing Notes; (iii) Guarantees of the Notes;
(iv) Debt of the Company or any Restricted Subsidiary outstanding at the time of
the initial issuance of the Notes; (v) Debt owed to and held by the Company or a
Wholly-Owned Restricted Subsidiary; (vi) Guarantees Incurred by the Company in
the ordinary course of business; (vii) Guarantees by any Restricted Subsidiary
of Debt of the Company or any Restricted Subsidiary, including Guarantees by any
Restricted Subsidiary of Debt under the Credit Agreement, provided that (a) such
Debt (other than Debt Incurred under clauses (i) and (ii) of this definition) is
Incurred in accordance with Section 4.6 hereof and (b) such Guarantees are
subordinated to the Notes to the same extent as the Debt being guaranteed;
(viii) Debt in respect of performance, surety or appeal bonds provided in the
ordinary course of business; (ix) Debt under Interest Swap Obligations and
Currency Hedge Obligations; (x) Debt owed by the Company to any Restricted
Subsidiary, provided that if for any reason such Debt ceases to be held by a
Restricted Subsidiary, such Debt shall cease to be Permitted Debt and shall be
deemed Incurred as Debt of the Company for purposes of this Indenture; (xi) Debt
Incurred to pay for Notes tendered pursuant to an Offer to Purchase in
connection with a Change of Control, provided that (a) the principal amount of
such Debt does not exceed the principal of the Notes purchased (plus the amount
of reasonable expenses incurred in connection therewith, including the
applicable purchase premium, but excluding accrued interest, if any) and (b)
such Debt (1) has an Average Life to Stated Maturity at least equal to or
greater than the remaining Average Life to Stated Maturity of the Notes and (2)
does not mature prior to the Stated Maturity of the Notes; (xii) Debt of a
Person (a) existing at the time such Person becomes a Restricted Subsidiary or
(b) assumed in connection with the acquisition of assets from such Person, other
than Debt Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or such acquisition, as the case may be,
provided that the sum of the aggregate principal amount of Debt under this
clause (xii) plus the aggregate principal amount of Debt under clauses (i),
(xiii) and (xiv) shall not exceed $87,000,000; (xiii) Debt of the Company or any
Restricted Subsidiary pursuant to Capital Lease Obligations and Purchase Money
Debt Incurred in the ordinary course of business, provided that the aggregate
principal amount of such Debt outstanding at any time may not exceed $2,000,000
in the aggregate; (xiv) Debt of the Company or
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any Restricted Subsidiary not otherwise permitted pursuant to this definition,
in an aggregate principal amount not to exceed $10,000,000 at any time
outstanding; and (xv) Refinancing Debt.
"Permitted Holders" means (i) Chartwell and (ii) Mobil Oil.
"Permitted Investments" means:
(a) Investments in existence on the date of initial issuance of the
Notes;
(b) Investments required pursuant to any agreement or obligation of
the Company or a Restricted Subsidiary, in effect on the Issue Date, to
make such Investments;
(c) Eligible Cash Equivalents;
(d) Investments in Property and other assets, including Stopping
Centers and Franchisee Receivables, owned or used by the Company or any
Restricted Subsidiary in the ordinary course of business;
(e) Investments by the Company or any of its Restricted Subsidiaries
in the Company or any Restricted Subsidiaries;
(f) Investments by the Company or any Restricted Subsidiary in a
Person, if as a result of such Investment (A) such Person becomes a
Restricted Subsidiary or (B) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated or wound-up into, the Company or a Restricted
Subsidiary;
(g) loans and advances to employees made in the ordinary course of
business in an amount not to exceed $750,000 in the aggregate at any time
outstanding;
(h) Interest Swap Obligations and Currency Hedge Obligations;
(i) non-cash consideration received in conjunction with an Asset Sale
that is otherwise permitted under the "Limitations on Asset Sales" covenant
set forth in Section 4.9 hereof;
(j) Fuel Hedging Obligations Incurred in the ordinary course of
business;
(k) Investments received in settlement of obligations owed to the
Company or any Restricted Subsidiary and as a result of bankruptcy or
insolvency proceedings or upon the foreclosure or enforcement of any Lien
in favor of the Company or any Restricted Subsidiary; and
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(l) Investments by the Company or any Restricted Subsidiary not
otherwise permitted under this definition, in an aggregate amount not to
exceed $5,000,000 at any one time outstanding.
"Permitted Liens" means (a) Liens existing at the time of the initial
issuance of the Notes; (b) Liens to secure Debt under the Credit Agreement or
Debt Incurred under clause (xiv) of the definition of "Permitted Debt," in the
aggregate, of up to $125,000,000 aggregate principal amount, or Liens to secure
a Restricted Subsidiary's Guarantee of such Debt under the Credit Agreement; (c)
Liens on Property or assets of the Company or a Restricted Subsidiary securing
Debt Incurred in compliance with clause (xiii) of the definition of "Permitted
Debt"; (d) any Lien for taxes or assessments or other governmental charges or
levies not then due and payable (or which, if due and payable, are being
contested in good faith and for which adequate reserves are being maintained, to
the extent required by GAAP); (e) any statutory warehousemen's, materialmen's,
landlord's or other similar Liens for sums not then due and payable (or which,
if due and payable, are being contested in good faith and with respect to which
adequate reserves are being maintained, to the extent required by GAAP); (f) any
title exception, easement, right-of-way, lease, sub-lease or other similar Lien
that does not materially impair the use or value of the Property subject thereto
in its use in the business of the Company or a Restricted Subsidiary thereof;
(g) Liens on Property or other assets (i) in connection with workers'
compensation, unemployment insurance and other types of statutory obligations or
the requirements of any official body, or (ii) to secure the performance of
tenders, bids, surety or performance bonds, leases, purchase, construction,
sales or servicing contracts and other similar obligations Incurred in the
ordinary course of business consistent with industry practice; or (iii) to
obtain or secure obligations with respect to letters of credit, Guarantees,
bonds or other sureties or assurances given in connection with the activities
described in clauses (i) and (ii) above, in each case not Incurred or made in
connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property or services or imposed by
ERISA or the Code in connection with a "plan" (as defined in ERISA) (other than
any Lien imposed in connection with the Company's 401(k) Plan) or (iv) arising
in connection with any attachment or judgment unless such Liens shall not be
satisfied or discharged or stayed pending appeal within 60 days after the entry
thereof or the expiration of any such stay; (h) Liens on Property of a Person
existing at the time such Person is merged with or into or consolidated with the
Company or a Restricted Subsidiary, or becomes a Restricted Subsidiary (and not
Incurred in anticipation of such transaction), provided that such Liens are not
extended to the Property and assets of the Company and its Restricted
Subsidiaries other than the Property or assets acquired; (i) Liens securing Debt
of a Restricted Subsidiary to the Company or a Restricted Subsidiary thereof or
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a Guarantee of Debt of the Company or a Restricted Subsidiary; (j) other Liens
incidental to the conduct of the business of the Company or any of its
Restricted Subsidiaries, as the case may be, or the ownership of their assets
that do not materially impair the use or value of the Property subject thereto
in its use in the business of the Company or such Restricted Subsidiary; (k)
Liens securing obligations under Interest Swap Obligations, Currency Hedge
Obligations and Fuel Hedging Obligations Incurred in connection with managing
interest or currency risk resulting from or related to a Credit Agreement; and
(l) Liens to secure any permitted extension, renewal, refinancing or refunding
(or successive extensions, renewals, refinancings or refundings), in whole or in
part, of any Debt secured by Liens referred to in the foregoing clauses (a)
through (l); provided that such Liens do not extend to any other Property or
assets and the principal amount of the Debt secured by such Liens is not
increased.
"Permitted Secured Debt" means any Debt of the Company or any Restricted
Subsidiary (plus interest, premium, fees and other obligations associated
therewith), and any refinancing, refunding, replacement, renewal or extension
thereof, (a) under the Credit Agreement, (b) constituting Purchase Money Debt,
(c) constituting Capital Lease Obligations or (d) secured by Permitted Liens.
"Permitted Tax Distribution" means for any fiscal year or portion thereof
(the "Tax Year") of any Person in which period such Person is a partnership or
other substantially similar pass-through entity for federal income tax purposes,
distributions to enable the partners or members of such Person to make payments
of federal, state and local income taxes (including estimates thereof) in
respect of the Taxable Income of such partner or member with respect to each
such Tax Year in an aggregate amount equal to the product of (i) the excess of
(A) the sum of the highest marginal federal income tax rate applicable during
such Tax Year to either corporations or individuals and the State Income Tax
Rate over (B) the product of such federal rate and the State Income Tax Rate and
(ii) such partner's or member's Taxable Income for such Tax Year.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"PFC" means the party named as such in the first paragraph of this
Indenture until a successor(s) replaces such party pursuant to Article V of this
Indenture and, thereafter, means the successor.
"Preferred Interests," as applied to the Capital Interests in any Person,
means Capital Interests in such Person of any class or classes (however
designated) that rank prior, as to the payment of dividends or as to the
distribution of assets upon
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any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Common Interests in such Person.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth on Exhibit A.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Equity Offering" means any underwritten public offering of Capital
Interests of the Company or a Successor Entity pursuant to an effective
registration statement (other than a registration statement on Form S-4 or Form
S-8 or any successor or similar form) under the Securities Act.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase."
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase."
"Purchase Money Debt" means Debt (i) Incurred to finance the purchase or
construction of any assets of such Person or any Restricted Subsidiary and (ii)
that is secured by a Lien on such assets where the lender's sole security is to
the assets so purchased or constructed, in either case that does not exceed 100%
of the cost and to the extent the purchase or construction prices for such
assets are or should be included in "addition to property, plant or equipment"
in accordance with GAAP.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase."
"Qualified Capital Interests" in any Person means a class of Capital
Interests other than Redeemable Capital Interests.
"Qualified Institutional Buyer" or "QIB" have the meaning set forth in Rule
144A.
"Redeemable Capital Interests" in any Person means any equity security of
such Person that by its terms (or by terms of any security into which it is
convertible or for which it is exchangeable), or otherwise (including the
passage of time or the happening of an event), is required to be redeemed, is
redeemable at the option of the holder thereof in whole or in part (including by
operation of a sinking fund), or is convertible or exchangeable for Debt of such
Person at the option of the holder thereof, in whole or in part, at any time
prior to the Stated Maturity of the Notes; provided, however, that Preferred
Interests of the Company or any Restricted Subsidiary thereof that are issued
with the benefit of provisions requiring a change of control offer to be made
for
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such Preferred Interests in the event of a change of control of the Company
or any Restricted Subsidiary, which provisions have substantially the same
effect as the provisions of this Indenture described under Section 4.18 hereof,
shall not be deemed to be Redeemable Capital Interests solely by virtue of such
provisions.
"Redemption Date" means, with respect to any Note, the date on which such
Note is to be redeemed by the Issuers pursuant to the terms of the Notes and
this Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Refinancing Debt" means Debt that refunds, refinances, renews, replaces or
extends any Debt permitted to be incurred by the Company or any Restricted
Subsidiary pursuant to the terms of this Indenture, whether involving the same
or any other lender or creditor or group of lenders or creditors, but only to
the extent that (i) the Refinancing Debt is subordinated to the Notes to at
least the same extent as the Debt being refunded, refinanced or extended, if at
all, (ii) the Refinancing Debt is scheduled to mature either (a) no earlier than
the Debt being refunded, refinanced or extended, or (b) at least 91 days after
the Maturity Date of the Notes, (iii) the Refinancing Debt has a weighted
average life to maturity at the time such Refinancing Debt is incurred that is
equal to or greater than the weighted average life to maturity of the Debt being
refunded, refinanced, renewed, replaced or extended, (iv) such Refinancing Debt
is in an aggregate principal amount that is less than or equal to the sum of (a)
the aggregate principal or accreted amount (in the case of any Debt issued with
original issue discount, as such) then outstanding under the Debt being
refunded, refinanced, renewed, replaced or extended, (b) the amount of accrued
and unpaid interest, if any, and premiums owed, if any, not in excess of
preexisting prepayment provisions on such Debt being refunded, refinanced,
renewed, replaced or extended and (c) the amount of customary fees, expenses and
costs related to the incurrence of such Refinancing Debt, and (v) such
Refinancing Debt is incurred by the same Person (or its successor) that
initially incurred the Debt being refunded, refinanced, renewed, replaced or
extended, except that the Company may incur Refinancing Debt to refund,
refinance, renew, replace or extend Debt of any Wholly-Owned Restricted
Subsidiary of the Company.
"Registration Rights Agreement" means the Note Registration Rights
Agreement, dated as of January 30, 1997 by and among the Issuers and CIBC Wood
Gundy Securities Corp. and Morgan Stanley & Co. Incorporated.
"Regulation S" means Regulation S promulgated under the Securities Act
(including any successor regulation thereto), as it may be amended from time to
time.
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"Replacement Asset" means, with respect to any Asset Sale, a Property or
asset that consists of a Stopping Center or that, as determined by the Board of
Directors as evidenced by a Board Resolution, is used or will be used in the
Stopping Center business of the Company or a Restricted Subsidiary or a business
reasonably related thereto.
"Restricted Payment" is defined to mean any of the following:
(a) any dividend or other distribution declared and paid on the
Capital Interests in the Company or on the Capital Interests in any
Restricted Subsidiary of the Company that are held by, or declared and paid
to, any Person other than the Company or a Wholly-Owned Restricted
Subsidiary of the Company (other than dividends, distributions or payments
made solely in Qualified Capital Interests in the Company);
(b) any payment made by the Company or any of its Restricted
Subsidiaries to purchase, redeem, acquire or retire any Capital Interests
in the Company (including the conversion into, or exchange for, Debt, of
any Capital Interests) other than the Debt Warrants;
(c) any payment made by any Restricted Subsidiary of the Company,
other than to the Company or another Restricted Subsidiary of the Company,
to purchase, redeem, acquire or retire any Capital Interests in a
Restricted Subsidiary;
(d) any payment made by the Company or any of its Restricted
Subsidiaries (other than a payment made solely in Qualified Capital
Interests in the Company) to redeem, repurchase, defease (including an in-
substance or legal defeasance) or otherwise acquire or retire for value
(including pursuant to mandatory repurchase covenants), prior to any
scheduled maturity, scheduled sinking fund or mandatory redemption payment,
Debt of either of the Issuers that is subordinate (whether pursuant to its
terms or by operation of law) in right of payment to the Notes and which
was scheduled to mature on or after the Maturity Date of the Notes;
(e) any Investment by the Company or a Restricted Subsidiary in any
Person, other than a Permitted Investment;
(f) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary on the basis of the greater of the fair market value or book
value of such Subsidiary; and
(g) any advisory fee paid to an Affiliate with respect to a specific
transaction (other than fees payable
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upon consummation of the Transactions on the closing date thereof).
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
promulgated under the Securities Act; provided that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary, at least 75% of the
outstanding Common Interests of which are owned and controlled, directly or
indirectly, by the Company that has not been designated as an "Unrestricted
Subsidiary" in accordance with this Indenture.
"Rule 144A" means Rule 144A promulgated under the Securities Act (including
any successor regulation thereto), as it may be amended from time to time.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
pursuant to which property is sold or transferred by the Company or a Restricted
Subsidiary and is thereafter leased back from the purchaser or transferee
thereof by the Company or a Restricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" has the meaning set forth in Rule 1-02 of
Regulation S-X under the Securities Act and Exchange Act but shall include any
direct or indirect Restricted Subsidiary of the Company owning one or more
Stopping Centers, but shall not include any Unrestricted Subsidiary.
"Standard & Poor's" means Standard & Poor's Ratings Group and its
successors.
"Stated Maturity," when used with respect to (i) any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal amount of such Note or such installment of
interest is due and payable and (ii) any other Debt or any installment of
interest thereon, the date specified in the instrument governing such Debt as
the fixed date on which the principal of such Debt or such installment of
interest is due and payable.
"State Income Tax Rate" means, with respect to any Person, the weighted
average highest marginal state and local income tax (inclusive of franchise or
other taxes in the nature of income taxes) rates applicable to corporations or
to individuals in any
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state in which such Person does business. The highest applicable marginal state
and local income tax rates of the states from which the Person derives net
income shall be weighted by the ratio of the Person's net income apportioned to
a state by that state to the sum of the Person's net income apportioned to all
states in which such Person is doing business.
"Stopping Centers" means multi-service truck stops or travel plaza
facilities, including "full-sized" and "Petro:2" units and Petro:Lube
maintenance facilities, which provide services and amenities to commercial truck
drivers as well as to other highway motorists and local residents, including
without limitation, facilities currently operated by the Company and its
Restricted Subsidiaries and businesses related or ancillary thereto.
"Subsidiary" means, with respect to any Person, any corporation, limited or
general partnership, trust, association or other business entity of which an
aggregate of at least a majority of the outstanding Capital Interests therein
is, at the time, directly or indirectly, owned by such Person and/or one or more
Subsidiaries of such Person.
"Successor Entity" means a corporation or other entity that succeeds to and
continues the business of Petro Stopping Centers, L.P.
"Taxable Income" means, with respect to any partner or member of a Person
that is a partnership or substantially similar pass-through entity for federal
income tax purposes, such partner's allocation of taxable income from such
Person for federal income tax purposes inclusive of each item of taxable gain,
loss, income, and deduction required to be taken into account separately by the
partners or members of such Person and taking into account allocations pursuant
to Section 704(c) of the Code. The character of each separately stated item
shall be disregarded for purposes of determining Taxable Income; provided that
net capital loss, as defined in Section 1222(10) of the Code, shall not be taken
into account in determining Taxable Income.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) as in effect on the date of this Indenture (except as provided in
Section 8.3 hereof).
"Transactions" means, collectively, the Equity Investment, the Tender
Offer, the Kirschner Investment and the entering into of the New Credit
Agreement (all as defined, and more fully described, in the Offering
Memorandum).
"Trust Officer" when used with respect to the Trustee, means any officer or
assistant officer of the Trustee assigned to the Corporate Trust Administration
department or similar department
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performing corporate trust work of the Trustee or any successor to such
department or, in the case of a successor Trustee, any officer of such successor
Trustee performing corporate trust functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
"U.S. Government Obligations" means (i) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Voting Interests" means, with respect to any Person, securities of any
class or classes of Capital Interests in such Person entitling the holders
thereof generally to vote on the election of members of the board of directors
or comparable body of such Person.
"Wholly-Owned" means, with respect to a Subsidiary, any Subsidiary, all of
the outstanding voting securities (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Company.
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Section 1.2. Other Definitions.
------------------
The definitions of the following terms may be found in the sections
indicated as follows:
Term Defined in Section
- ---- ------------------
"Affiliate Transaction"...................................... 4.10
"Agent Members".............................................. 2.14
"Bankruptcy Law"............................................. 6.1
"Business Day"............................................... 11.8
"Covenant Defeasance"........................................ 9.3
"Custodian".................................................. 6.1
"Discharge".................................................. 9.1
"Event of Default"........................................... 6.1
"Excess Proceeds"............................................ 4.9
"Exchange Notes"............................................. 2.2
"Global Notes"............................................... 2.1
"Legal Defeasance"........................................... 9.2
"Legal Holiday".............................................. 11.8
"Offshore Physical Notes".................................... 2.1
"Paying Agent"............................................... 2.3
"Physical Notes"............................................. 2.1
"Private Exchange Notes"..................................... 2.2
"Registrar".................................................. 2.3
"Required Filing Dates"...................................... 4.2
"Reinvestment Date".......................................... 4.9
"Specified Period"........................................... 4.6
"Surviving Entity"........................................... 5.1
"Unrestricted Subsidiary".................................... 4.13
Section 1.3. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the portion of
such provision required to be incorporated herein in order for this Indenture to
be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor on the indenture securities" means the Issuers, the Guarantors or
any other obligor on the Notes.
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All other terms used in this Indenture that are defined by the TIA, defined
in the TIA by reference to another statute or defined by SEC rule have the
meanings therein assigned to them.
Section 1.4. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) words used herein implying any gender shall apply to every
gender;
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or Subdivision,
unless expressly stated otherwise; and
(7) the term "interest" shall include all Additional Interest as provided
in the Registration Rights Agreement for purposes of this Indenture and the
Notes.
ARTICLE II.
THE NOTES
---------
Section 2.1. Dating; Incorporation of Form in Indenture.
------------------------------------------
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A which is incorporated in and made part of
this Indenture. The Notes may have notations, legends or endorsements required
by law, any depository trust company or stock exchange rule or usage. The
Issuers may use "CUSIP" numbers in issuing the Notes. The Issuers shall approve
the form of the Notes. Each Note shall be dated the date of its authentication.
The Notes offered and sold to Qualified Institutional Buyers in reliance on
Rule 144A shall be issued initially in the form of one or more permanent Global
Notes in registered form, substantially in the form set forth in Exhibit A
("Global Notes"), deposited with the Trustee, as custodian for the Depository,
duly executed by the Issuers and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth on Exhibit B. The aggregate
principal amount of any Global
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Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued in the form of certificated Notes in registered form in
substantially the form set forth in Exhibit A (the "Offshore Physical Notes").
Notes offered and sold to Institutional Accredited Investors or in reliance on
any other exemption from registration under the Securities Act (other than as
described in the preceding paragraph) shall be issued, and Notes offered and
sold in reliance on Rule 144A to Qualified Institutional Buyers may, after their
initial issuance, be issued, in the form of certificated Notes in registered
form in substantially the form set forth in Exhibit A (the "U.S. Physical
Notes"). The Offshore Physical Notes and the U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes."
Section 2.2. Execution and Authentication.
----------------------------
The Notes shall be executed on behalf of each of the Issuers by an Officer
of each of the Issuers. Such signatures may be either manual or facsimile. The
seal of each Issuer shall be impressed, affixed, imprinted or reproduced on the
Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time the Trustee authenticates the Note or at anytime thereafter, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the Note. Such signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture. The Trustee or an authenticating agent shall authenticate Notes for
original issue in the aggregate principal amount of up to $135,000,000 upon a
Company Request. The aggregate principal amount of Notes outstanding at any
time may not exceed such amount except as provided in Section 2.7 hereof. Upon
receipt of a Company Request and an Officers' Certificate from the Issuers
certifying that the registration statement relating to the exchange offer
specified in the Registration Rights Agreement is effective and that the
conditions precedent to a private exchange thereunder have been met, the Trustee
shall authenticate an additional series of Notes in an aggregate principal
amount not to exceed $135,000,000 for issuance in exchange for all Notes
previously issued pursuant to an exchange offer registered under the Securities
Act or pursuant to a Private Exchange (as defined in the Registration Rights
Agreement). Exchange Notes (as defined in the Registration Rights Agreement) or
Private Exchange Notes (as defined in the Registration Rights Agreement) may
have such distinctive series designations and such changes in the form (but not
the substance)
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thereof as are specified in the Company Request referred to in the preceding
sentence. The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and integral multiples thereof.
The Trustee may appoint an authenticating agent acceptable to the Issuers
to authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. Such authenticating agent shall have the same
right as the Trustee in dealing with the Issuers or any Affiliate of the
Issuers.
Section 2.3. Registrar and Paying Agent.
--------------------------
The Issuers shall appoint a registrar, which shall maintain an office or
agency where Notes may be presented for registration of transfer or for exchange
("Registrar"), and a paying agent, which shall maintain an office or agency
located in the Borough of Manhattan, City of New York, State of New York, where
Notes may be presented for payment ("Paying Agent") and shall maintain an office
or agency where notices and demands to or upon the Issuers in respect of the
Notes and this Indenture may be served. The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Issuers may appoint one or
more co-registrars and one or more additional paying agents. Neither the
Issuers nor any Affiliate of the Issuers may act as Paying Agent. The Issuers
may change any Paying Agent, Registrar or co-registrar without notice to any
Noteholder. The Issuers shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party (or Affiliate of a party) to this
Indenture. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Issuers shall notify the Trustee of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or
Paying Agent, or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such and shall be entitled to
appropriate compensation pursuant to Section 7.7. The Issuers initially appoint
the Trustee as Registrar, Paying Agent and agent for service of notices and
demands in connection with the Notes and State Street Bank and Trust Company,
N.A., 51 Broadway, New York, New York 10006, as the Paying Agent's office in New
York, New York.
Section 2.4. Paying Agent To Hold Money in Trust.
-----------------------------------
Each Paying Agent shall hold in trust for the benefit of the Noteholders or
the Trustee all money held by the Paying Agent for the payment of principal,
Redemption Price or Purchase Price of, and accrued interest on, the Notes
(whether such money has been paid to it by the Issuers or any other obligor on
the Notes), and the Issuers and the Paying Agent shall notify the Trustee of any
default by the Issuers (or any other obligor on the Notes) in
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making any such payment. Money held in trust by the Paying Agent need not be
segregated except as required by law and in no event shall the Paying Agent be
liable for any interest on any money received by it hereunder. The Issuers at
any time may require a Paying Agent to pay all money held by it to the Trustee
and the Trustee may, at any time during the continuance of any Event of Default
specified in Section 6.1(1) or (2), upon written request to a Paying Agent,
require such Paying Agent to forthwith pay to the Trustee all sums so held in
trust by such Paying Agent together with a complete accounting of such sums.
Upon doing so, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Section 2.5. Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Issuers shall furnish to
the Trustee on or before each January 15 and July 15 in each year, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Noteholders, including the aggregate principal amount of Notes held by each such
Noteholder.
Section 2.6. Transfer and Exchange.
---------------------
Subject to Section 2.15, when a Note is presented to the Registrar with a
request to register the transfer thereof, the Registrar shall register the
transfer as requested and, when Notes are presented to the Registrar with a
request to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall make the exchange as requested,
provided that every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to the Issuers and the Registrar duly executed by
the Holder thereof or his attorney, duly authorized in writing. To permit
registration of transfers and exchanges, upon surrender of any Note for
registration of transfer at the office or agency maintained pursuant to Section
2.3 hereof, the Issuers shall issue and execute and the Trustee shall
authenticate Notes at the Registrar's request. Any exchange or transfer shall
be without any service charge to the Noteholder, except that the Issuers may
require payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 2.9, 3.6
or 8.5 hereof. The Trustee shall not be required to register transfers of Notes
or to exchange Notes for a period of 15 days before selection of any Notes to be
redeemed or purchased pursuant to Sections 4.9 and 4.18. The Trustee shall not
be required to exchange or register transfers of any Notes called or being
called for redemption or selected or being selected for repurchase in whole or
in part,
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<PAGE>
except the unredeemed or unpurchased portion of any Note being redeemed or
repurchased in part.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of the beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Global Note shall be required to be reflected in a book entry. Each Holder of a
Note agrees to indemnify the Issuers and the Trustee against any liability that
may result from the transfer, exchange or assignment of such Holder's Note in
violation of any provision of this Indenture and/or applicable U.S. federal or
state securities law.
Section 2.7. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Registrar or Trustee or if the
Holder of a Note presents evidence to the satisfaction of the Issuers and the
Trustee that the Note has been lost, destroyed or wrongfully taken and of the
ownership thereof, the Issuers shall issue and the Trustee shall authenticate a
replacement Note if the requirements of Section 8-405 of the New York Uniform
Commercial Code as in effect on the date of this Indenture are met. An indemnity
bond may be required by the Issuers or the Trustee that is sufficient in the
judgment of the Issuers and the Trustee to protect the Issuers, the Trustee or
any Agent from any loss which any of them may suffer if a Note is replaced. The
Issuers and the Trustee each may charge for its expenses (including reasonable
attorneys' fees and expenses) in replacing a Note. Every replacement Note is an
additional obligation of the Issuers.
Section 2.8. Outstanding Notes.
-----------------
Notes outstanding at any time are all Notes authenticated by the Trustee
except for those cancelled by it, those delivered to it for cancellation, and
those described in this Section 2.8 as not outstanding. If a Note is replaced
pursuant to Section 2.7, it ceases to be outstanding until the Issuers and the
Trustee receive proof satisfactory to each of them that the replaced Note is
held by a bona fide purchaser.
If the Trustee or a Paying Agent holds on a Redemption Date, Purchase Date
or Maturity Date money sufficient to pay the principal, Redemption Price or
Purchase Price of, and accrued interest on, Notes payable on that date, then on
and after that date such Notes cease to be outstanding and interest on them
ceases to accrue. Subject to Section 11.6, a Note does not cease to be
outstanding solely because an Issuer or any Affiliate of the Issuers holds the
Note.
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Section 2.9. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Issuers may prepare and
the Trustee, upon receipt of a Company Request, shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form, and shall carry all
rights, benefits and privileges, of definitive Notes but may have variations
that the Issuers consider appropriate for temporary Notes. Without unreasonable
delay, the Issuers shall prepare and the Trustee shall authenticate definitive
Notes in exchange for temporary Notes presented to it.
Section 2.10. Cancellation.
------------
The Issuers at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee shall cancel
and retain or, upon written request of the Issuers, may destroy (subject to the
record-retention requirements of the Exchange Act) or return to the Issuers in
accordance with its normal practice, all Notes surrendered for transfer,
exchange, payment or cancellation and if such Notes are destroyed, deliver a
certificate of destruction to the Issuers unless the Issuers instruct the
Trustee in writing to deliver the Notes to the Issuers. Subject to Section 2.7
hereof, the Issuers may not issue new Notes to replace Notes (i) in respect of
which it has previously paid all principal, Redemption Price or Purchase Price,
and accrued interest thereon, or (ii) delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
------------------
If the Issuers default in a payment of interest on the Notes, such interest
shall forthwith cease to be payable to the registered Holder on the relevant
record date and the Issuers shall pay the defaulted amounts, plus (to the extent
permitted by law) any interest payable on defaulted amounts pursuant to Section
4.1 hereof, to the Persons who are Noteholders on a subsequent special record
date. The Issuers shall fix the special record date and payment date in a
manner satisfactory to the Trustee and provide the Trustee at least 20 days'
notice of the proposed amount to be paid and the payment date. At least 15 days
before the special record date, the Issuers shall mail or cause to be mailed to
each Noteholder at his address as it appears on the Notes register maintained by
the Registrar a notice that states the special record date, the payment date
(which shall be not less than five nor more than ten days after the special
record date), and the amount to be paid. In lieu of the foregoing procedures,
the Issuers may pay such amounts in any other lawful manner satisfactory to the
Trustee.
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Section 2.12. Deposit of Moneys.
-----------------
Prior to 10:00 a.m., New York City time, on each Interest Payment Date and
Maturity Date, the Issuers shall have deposited with the Paying Agent in New
York, New York in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Trustee to remit payment to
the Holders on such Interest Payment Date or Maturity Date, as the case may be.
The principal, Redemption Price or Purchase Price of, and accrued interest on,
Global Notes shall be payable by the Paying Agent to the Depository or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the Global Notes represented thereby. The principal, Redemption Price or
Purchase Price of, and accrued interest on, Physical Notes shall be payable at
the office of the Paying Agent in New York, New York.
Section 2.13. CUSIP Number.
------------
The Issuers, in issuing the Notes, may use a "CUSIP" number(s), and if so,
the Trustee shall use the CUSIP number(s) in notices of redemption or exchange
as a convenience to Holders, provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number(s)
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes.
Section 2.14. Book-Entry Provisions for Global Notes.
--------------------------------------
(a) The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository and (iii) bear legends as set forth in Exhibit
B.
Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Note, and the Depository may be treated by the Issuers, the Trustee and any
agent of the Issuers or the Trustee as the absolute owner of the Global Note for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes (including the exchange thereof for Exchange
Notes pursuant to the exchange offer contemplated by Section 2.2) shall be
limited to transfer in whole, but not in part, to the Depository, its successors
or
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their respective nominees. Interests of beneficial owners in the Global Notes
may be transferred or exchanged for Physical Notes in accordance with the rules
and procedures of the Depository and the provisions of Section 2.15. In
addition, Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Notes if (i) the Depository
notifies the Issuers that it is unwilling or unable to continue as Depository
for any Global Note and a successor depositary is not appointed by the Company
within 90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a written request from the Depository
to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Issuers
shall execute, and the Trustee shall, upon receipt of a written order from the
Issuers, authenticate and make available for delivery one or more Physical Notes
of like tenor and amount.
(d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuers shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in writing in exchange for its beneficial interest
in the Global Notes, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b), (c) or (d)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.15, bear the Private Placement Legend regarding transfer restrictions
applicable to the Physical Notes set forth in Exhibit A.
(f) The Holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture, the Notes or the Guarantees.
Section 2.15. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
--------------------------------------------------------------------
Persons. The following provisions shall apply with respect to the registration
- -------
of any proposed transfer of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:
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(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after February
1, 2000 or (y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person (including a QIB), the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of (x)
the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
whereupon the Registrar shall reflect on its books and records the date and (if
the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Issuers shall execute and the Trustee shall authenticate and make
available for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
-----------------
to the registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Issuers and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Issuers and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Issuers as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
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(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global Note
in an amount equal to the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) Private Placement Legend. Upon the transfer, exchange or replacement
------------------------
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Notes bearing the Private Placement Legend, the
Registrar shall deliver only Notes that bear the Private Placement Legend unless
(i) the circumstances contemplated by paragraph (a)(i)(x) of this Section 2.15
exist, (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Issuers and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such Note
has been sold pursuant to an effective registration statement under the
Securities Act and the Registrar has received an Officers' Certificate from the
Issuers to such effect.
(d) General. By its acceptance of any Note bearing the Private Placement
-------
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.14 or this Section 2.15. The
Issuers shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable notice to the Registrar.
ARTICLE III.
REDEMPTION
----------
Section 3.1. Notices to Trustee.
------------------
If the Issuers elect to redeem Notes pursuant to Section 3.7 hereof, (i) at
least 60 days prior to the Redemption Date in the case of a partial redemption,
(ii) at least 45 days prior to the Redemption Date in the case of a total
redemption or (iii) during such other period as the Trustee may agree to in
writing, the Issuers shall notify the Trustee in writing of the Redemption Date,
the principal amount of Notes to be redeemed and the
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Redemption Price, and deliver to the Trustee an Officers' Certificate stating
that such redemption will comply with the conditions contained in Section 3.7
hereof, as appropriate.
Section 3.2. Selection by Trustee of Notes to Be Redeemed.
--------------------------------------------
In the event that fewer than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed, if the Notes are listed on a
national securities exchange, in accordance with the rules of such exchange or,
if the Notes are not so listed, by lot, pro rata or by such other method as it
shall deem fair and appropriate. The Trustee shall promptly notify the Issuers
of the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed. The Trustee may
select for redemption portions of the principal of the Notes that have
denominations larger than $1,000. Notes and portions thereof the Trustee
selects shall be redeemed in amounts of $1,000 or whole multiples of $1,000.
For all purposes of this Indenture unless the context otherwise requires,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
--------------------
At least 30 days, but no more than 60 days, before a Redemption Date, the
Issuers shall mail, or cause to be mailed, a notice of redemption by first-class
mail to each Holder of Notes to be redeemed at his or her last address as the
same appears on the registry books maintained by the Registrar pursuant to
Section 2.3 hereof.
The notice shall identify the Notes to be redeemed (including the CUSIP
numbers thereof) and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date and upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(6) that unless the Issuers default in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date;
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(7) the paragraph of Section 3.7 hereof pursuant to which the Notes
called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are being redeemed.
At the request of the Issuers, the Trustee shall give the notice of
redemption in the name of the Issuers and at the sole expense of the Issuers.
Section 3.4. Effect of Notice of Redemption.
------------------------------
Once the notice of redemption described in Section 3.3 is mailed, Notes
called for redemption become due and payable on the Redemption Date and at the
Redemption Price, plus interest accrued to the Redemption Date. Upon surrender
to the Paying Agent, such Notes shall be paid at the Redemption Price, plus
interest accrued to the Redemption Date, provided that if the Redemption Date is
after a regular interest payment record date and on or prior to the Interest
Payment Date, the accrued interest shall be payable to the Holder of the
redeemed Notes registered on the relevant record date, and provided, further,
that if a Redemption Date is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from such
Redemption Date to such succeeding Business Day. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
Section 3.5. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 A.M., New York City time, on each Redemption Date, the
Issuers shall deposit with the Paying Agent in immediately available funds money
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions thereof called for
redemption on that date which have been delivered by the Issuers to the Trustee
for cancellation.
On and after any Redemption Date, if money sufficient to pay the Redemption
Price of and accrued interest on Notes called for redemption shall have been
made available in accordance with the preceding paragraph and payment thereof is
not prohibited pursuant to the terms of this Indenture, the Notes called for
redemption will cease to accrue interest and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price of and, subject to
the first proviso in Section 3.4, accrued and unpaid interest on such Notes to
the Redemption Date. If any Note called for redemption shall not be so paid,
interest will be paid, from the Redemption Date until such redemption payment is
made, on the unpaid Redemption Price of the Note and any interest not paid on
such unpaid amount, in each case, at the rate and in the manner provided in the
Notes.
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Section 3.6. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for a Holder a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
Section 3.7. Optional Redemption.
-------------------
(a) The Issuers may redeem the Notes, at the option of the Issuers, in
whole or in part, at any time on or after February 1, 2002, upon not less than
30 nor more than 60 days' notice at the following Redemption Prices (expressed
as percentages of the principal amount to be redeemed) set forth below, plus
accrued interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant regular record date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), if
redeemed during the 12-month period beginning February 1, of the years
indicated:
Year Redemption Price
---- ----------------
2002 105.250%
2003 103.500%
2004 101.750%
2005 and thereafter 100.000%
(b) In addition to the foregoing, prior to February 1, 2000, the Issuers
may, with the net proceeds of one or more Public Equity Offerings of Qualified
Capital Interests in the Company or a Successor Entity, redeem up to 35% of the
aggregate principal amount of the outstanding Notes at a Redemption Price
(expressed as a percentage of the principal amount to be redeemed) of 110.500%,
plus accrued interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant regular record date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date); provided
that at least $87,800,000 of the principal amount of Notes originally issued
remains outstanding immediately after the occurrence of any such redemption and
that any such redemption occurs within 90 days following the closing of any such
Public Equity Offering.
ARTICLE IV.
COVENANTS
---------
Section 4.1. Payment of Notes.
----------------
The Issuers shall pay or cause to be paid the principal, Redemption Price
or Purchase Price of, and accrued interest (which shall include any applicable
Additional Interest as provided in the Registration Rights Agreement) on, the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal, Redemption Price or
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Purchase Price of, or accrued interest on, the Notes shall be considered paid on
the date it is due if the Trustee or a Paying Agent holds on that date money
designated for and sufficient to pay such installment. The Issuers shall pay
interest on overdue principal, Redemption Price and Purchase Price (including
post-petition interest in a proceeding under any Bankruptcy Law) and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.2. SEC Reports.
-----------
(a) Whether or not the Issuers or any Guarantor are subject to Section
13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the
Issuers and any Guarantors will, to the extent accepted by the SEC and not
prohibited under the Exchange Act, file with the SEC the annual reports,
quarterly reports and other documents which the Issuers and any Guarantors would
have been required to file with the SEC pursuant to such Section 13(a) or 15(d)
or any successor provision thereto if the Issuers or any Guarantor were subject
thereto, such documents to be filed with the SEC on or prior to the respective
dates (the "Required Filing Dates") by which the Issuers or any Guarantor would
have been required to file them. The Issuers and any Guarantors will also, in
any event, (i) within 15 days of each Required Filing Date (A) transmit by mail
to all Holders, as their names and addresses appear in the security register,
without cost to such Holders, and (B) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Issuers and any
Guarantors would have been required to file with the SEC pursuant to Section
13(a) or 15(d) of the Exchange Act or any successor provisions thereto if the
Issuers or any Guarantor were subject thereto and (ii) if filing such documents
by the Issuers or any Guarantor with the SEC is not accepted by the SEC or is
prohibited under the Exchange Act, promptly upon written request, supply copies
of such documents to any prospective Holder.
(b) The Issuers will, upon request, provide to any Holder of Notes or any
prospective transferee of any such Holder any information concerning the Issuers
(including financial statements) necessary in order to permit such Holder to
sell or transfer Notes in compliance with Rule 144A under the Securities Act;
provided, however, that the Issuers shall not be required to furnish such
information in connection with any request made on or after the date which is
three years from the later of (i) the date such Note (or any predecessor Note)
was acquired from the Issuers or (ii) the date such Note (or any predecessor
Note) was last acquired from an "affiliate" of the Issuers within the meaning of
Rule 144 under the Securities Act.
Section 4.3. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Issuers covenant (to the extent that they may lawfully do so) that they
will not at any time insist upon, or plead (as a defense or otherwise) or in any
manner whatsoever claim or take
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the benefit or advantage of, any stay or extension law or any usury law or other
law which would prohibit or forgive the Issuers from paying all or any portion
of the principal, Redemption Price or Purchase Price of, and accrued interest
on, the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture and (to the extent that they may lawfully do so) the Issuers hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 4.4. Compliance Certificate.
----------------------
(a) The Issuers shall deliver to the Trustee, within 100 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during such fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether each of the Issuers has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each of the
Issuers has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all or such Defaults
or Events of Default of which he or she may have knowledge and what action the
Issuer is taking or proposes to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal, Redemption Price or Purchase
Price of, and accrued interest on, the Notes are prohibited or, if such event
has occurred, a description of the event and what action each of the Issuers is
taking or proposes to take with respect thereto.
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.2 above shall be
accompanied by a written statement of each Issuer's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Issuer has violated any provisions of this Article IV or Article V of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly for any failure to obtain knowledge of any such
violation.
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(c) The Issuers will, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Issuers are taking or propose to take with respect
thereto.
Section 4.5. Taxes.
-----
The Company shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all material taxes, assessments, and governmental levies except
as contested in good faith and by appropriate proceedings.
Section 4.6. Limitation on Debt.
------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Debt (including Acquired Debt), unless immediately
after giving effect to the Incurrence of such Debt and the receipt and
contemporaneous application of the proceeds therefrom, (a) the Interest Coverage
Ratio of the Company and its Restricted Subsidiaries for the last four fiscal
quarters for which financial information is available at the date of
determination (the "Specified Period"), determined on a pro forma basis as if
any such Debt, and any other Debt Incurred since the beginning of the Specified
Period, had been Incurred and the proceeds thereof had been applied at the
beginning of the Specified Period, and any other Debt repaid since the beginning
of the Specified Period had been repaid at the beginning of the Specified
Period, would be greater than 2.0:1 if the Debt is Incurred prior to February 1,
1999 and 2.25:1 if the Debt is Incurred thereafter and (b) no Default or Event
of Default shall have occurred and be continuing at the time or as a consequence
of the Incurrence of such Debt.
(b) If, during the Specified Period or subsequent thereto and prior to the
date of determination, the Company or any of its Restricted Subsidiaries shall
have engaged in any Asset Sale or acquisition, or shall have designated any
Restricted Subsidiary to be an Unrestricted Subsidiary or any Unrestricted
Subsidiary to be a Restricted Subsidiary, EBITDA and Adjusted Interest Expense
for the Specified Period shall be calculated on a pro forma basis giving effect
to such Asset Sale or acquisition or designation, as the case may be, and the
application of any proceeds therefrom as if such Asset Sale or acquisition or
designation had occurred on the first day of the Specified Period.
(c) If the Debt which is the subject of a determination under this
Section 4.6 is Acquired Debt, or Debt Incurred in connection with the
simultaneous acquisition of any Person, business, Property or assets, or Debt of
an Unrestricted Subsidiary being designated as a Restricted Subsidiary, then
such ratio shall be determined by giving effect (on a pro forma basis,
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as if the transaction had occurred at the beginning of the Specified Period) to
both the incurrence or assumption of such Acquired Debt or such other Debt by
the Company or any of its Restricted Subsidiaries and the inclusion in EBITDA of
the EBITDA of the acquired Person, business, Property or assets or redesignated
Subsidiary.
(d) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may Incur Permitted Debt.
(e) The Incurrence of Debt solely to develop a Stopping Center shall be
determined in accordance with the definition of "Incur" set forth in Section
1.1.
Section 4.7. Limitation on Issuance and Sale of Capital
Interests in Restricted Subsidiaries.
------------------------------------------
The Company will not permit any Restricted Subsidiary of the Company to
issue any Capital Interest (other than any required directors' qualifying
shares) to any Person other than the Company or a Wholly-Owned Restricted
Subsidiary thereof. The Company will not sell, and will not permit any of its
Restricted Subsidiaries to sell, any Capital Interests in any Restricted
Subsidiary to any Person other than the Company or a Wholly-Owned Restricted
Subsidiary unless all such Capital Interests owned by the Company and its
Restricted Subsidiaries are sold in one or more contemporaneous transactions;
provided, however, that the Company will not sell any Capital Interest in PFC to
any Person other than a Wholly-Owned Restricted Subsidiary of the Company.
Section 4.8. Limitation on Restricted Payments.
---------------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment unless, at
the time of and after giving effect to the proposed Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or will occur as a consequence thereof;
(ii) after giving effect to such Restricted Payment on a pro forma
basis, the Company would be permitted to Incur at least $1.00 of additional
Debt (other than Permitted Debt) pursuant to the provisions described in
paragraph (a) of Section 4.6 hereof; and
(iii) after giving effect to such Restricted Payment on a pro forma
basis, the aggregate amount expended or declared for all Restricted
Payments made on or after the date of initial issuance of the Notes shall
not exceed the sum (without duplication) of (a) 50% of the Adjusted Net
Income (or, if Adjusted Net Income shall be a deficit, minus 100% of such
deficit) of the Company accrued on a cumulative
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basis during the period (taken as one accounting period) beginning on the
first day of the fiscal quarter in which the initial issuance of the Notes
occurs and ending on the last day of the fiscal quarter immediately
preceding the date of such proposed Restricted Payment, plus (b) 100% of
the aggregate net cash proceeds received by the Company subsequent to the
initial issuance of the Notes from the issuance and sale (other than to a
Restricted Subsidiary) of its Qualified Capital Interests, including
Qualified Capital Interests issued upon the conversion of Debt or
Redeemable Capital Interests of the Company issued after the initial
issuance of the Notes, and from the exercise of options, warrants or other
rights to purchase such Qualified Capital Interests, less any such proceeds
used to redeem Notes in accordance with paragraph (b) of Section 3.7
hereof, plus (c) 100% of the net reduction in Investments (other than
Permitted Investments), subsequent to the date of the initial issuance of
the Notes, in any Person, resulting from payments of interest on Debt,
dividends, repayments of loans or advances (but only to the extent such
interest, dividends or repayments are not included in the calculation of
Adjusted Net Income), in each case to the Company or any Restricted
Subsidiary from any Person (including, without limitation, from
Unrestricted Subsidiaries) or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries in accordance with this Indenture,
not to exceed in the case of any Person the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Person.
(b) Notwithstanding paragraph (a) of this Section 4.8, the Company and its
Restricted Subsidiaries may take the following actions, provided that with
respect to clauses (ii), (iii), (iv), (vi) and (vii) below, immediately after
giving effect to such action, no Default or Event of Default has occurred and is
continuing:
(i) the payment of any dividend on Capital Interests in the Company or
a Restricted Subsidiary within 60 days after declaration thereof if at the
declaration date such payment would not have been prohibited by the
foregoing provisions of this Section 4.8;
(ii) the retirement of any Qualified Capital Interests of the Company
by conversion into, or by or in exchange for, Qualified Capital Interests,
or out of net cash proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of other Qualified Capital Interests
of the Company;
(iii) the redemption, defeasance, repurchase or acquisition or
retirement for value of any Debt of the Company that is subordinate in
right of payment to the Notes out of the net cash proceeds of a
substantially
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concurrent issue and sale (other than to a Restricted Subsidiary) of new
subordinated Debt of the Company Incurred in accordance with this
Indenture;
(iv) payments due under the Permitted Affiliate Agreements that would
otherwise constitute Restricted Payments (other than pursuant to clause (v)
below);
(v) cash distributions by the Company to its partners on its Capital
Interests, for so long as it is organized as a partnership or other
substantially similar pass-through entity for federal income tax purposes,
in aggregate amounts not exceeding the aggregate amount of Permitted Tax
Distributions accrued after December 31, 1996;
(vi) the purchase, redemption, retirement or other acquisition for
value of Capital Interests in the Company held by employees or former
employees of the Company or any Restricted Subsidiary (or their estates or
beneficiaries under their estates) upon death, disability, retirement,
termination of employment or pursuant to the terms of any agreement under
which such Capital Interests were issued; provided that the aggregate cash
consideration paid for such purchase, redemption, retirement or other
acquisition of such Capital Interests does not exceed $750,000 in any
fiscal year; and
(vii) payments that would otherwise constitute Restricted Payments,
not to exceed $100,000 in the aggregate.
(c) The actions described in clauses (i), (ii), (iv), (vi) and (vii) of
paragraph (b) of this Section 4.8 shall reduce, but without duplication, the
amount that would otherwise be available for Restricted Payments under clause
(iii) of paragraph (a) of this Section 4.8.
(d) If the Company makes a Restricted Payment which, at the time of the
making of such Restricted Payment, in the good faith determination of the Board
of Directors of the Company, would be permitted under the requirements of this
Indenture, such Restricted Payment shall be deemed to have been made in
compliance with this Indenture notwithstanding any subsequent adjustment made in
good faith to the Company's financial statements affecting Adjusted Net Income.
(e) If any Person in which an Investment is made, which Investment
constitutes a Restricted Payment when made, thereafter becomes a Restricted
Subsidiary in accordance with this Indenture, all such Investments previously
made in such Person shall no longer be counted as Restricted Payments for
purposes of calculating the aggregate amount of Restricted Payments pursuant to
clause (iii) of paragraph (a) of this Section 4.8, in each
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case to the extent such Investments would otherwise be so counted.
(f) If the Company or a Restricted Subsidiary transfers, conveys, sells,
leases or otherwise disposes of an Investment in accordance with Section 4.9
hereof, which Investment was originally included in the aggregate amount
expended or declared for all Restricted Payments pursuant to clause (c) of the
definition of "Restricted Payments," the aggregate amount expended or declared
for all Restricted Payments shall be reduced by the lesser of (i) the Net Cash
Proceeds from the transfer, conveyance, sale, lease or other disposition of such
Investment or (ii) the amount of the original Investment, in each case, to the
extent originally included in the aggregate amount expended or declared for all
Restricted Payments pursuant to clause (c) of the definition of "Restricted
Payments."
(g) For purposes of this Section 4.8, if a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be an amount equal to the cash portion of
such Restricted Payment, if any, plus an amount equal to the Fair Market Value
of the non-cash portion of such Restricted Payment.
Section 4.9. Limitation on Asset Sales.
-------------------------
(a) The Company will not, and will not permit any Restricted Subsidiary
to, consummate an Asset Sale unless the Company or such Restricted Subsidiary,
as the case may be, (i) receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the Property or assets sold or otherwise
disposed of; (ii) at least 85% of the consideration received by the Company or
such Restricted Subsidiary for such Property or assets consists of cash or
Eligible Cash Equivalents; provided that the amount of any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet) of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinate to the Notes or any Guarantee
thereof by any Restricted Subsidiary) that are assumed or forgiven by the
transferee of any such assets will be deemed to be cash for the purposes of this
clause (ii); and (iii) the Net Cash Proceeds received by the Company or such
Restricted Subsidiary are applied, to the extent the Company elects, (A) to
repay and permanently reduce outstanding Permitted Secured Debt or the Existing
Notes (including Existing Notes issuable in connection with the Debt Warrants)
and to permanently reduce the commitments in respect thereof, provided, however,
that such repayment and commitment reduction occurs within 270 days following
the receipt of such Net Cash Proceeds, or (B) to an investment in Replacement
Assets, provided, however, that such investment occurs or the Company or such
Restricted Subsidiary enters into contractual commitments to make such
investment, subject only to customary conditions (other than the obtaining of
financing), on or prior
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to the 270th day following receipt of such Net Cash Proceeds (the "Reinvestment
Date") and Net Cash Proceeds contractually committed are so applied within 365
days following the receipt of such Net Cash Proceeds. Notwithstanding any
provision of this Section 4.9, Asset Swaps and Fuel Hedging Obligations entered
into by the Company or any Restricted Subsidiary in the ordinary course of
business shall not be subject to clause (ii) of the immediately preceding
sentence.
(b) Any Net Cash Proceeds from any Asset Sale that are not used to
reinvest in Replacement Assets and/or repay Permitted Secured Debt or the
Existing Notes (including Existing Notes issuable in connection with the Debt
Warrants) in accordance with Section 4.9(a) shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10,000,000, the
Issuers shall make an Offer to Purchase, from all Holders, Notes in an aggregate
principal amount equal to the Excess Proceeds, at a Purchase Price in cash equal
to 100% of the principal amount thereof, together with accrued interest, if any,
to the Purchase Date. On or before the Purchase Date, the Trustee shall, to the
extent lawful, accept for payment, on a pro rata basis or by such other method
as the Trustee shall deem fair and appropriate to the extent necessary, Notes or
portions thereof or beneficial interests under a Global Note properly tendered
pursuant to the Offer to Purchase, deposit with the Paying Agent U.S. legal
tender sufficient to pay the purchase price plus accrued interest, if any, on
the Notes to be purchased and deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Issuers in accordance with the terms of this Section 4.9. The Paying Agent
shall promptly mail or deliver to each tendering Holder an amount equal to the
Purchase Price of the Note tendered by such Holder and accepted by the Company
for purchase (which payment shall, in the case of the Holders of interests in
the Global Note, be through the facilities of the Depository), and the Issuers
shall promptly issue a new Note, and the Trustee shall authenticate and mail or
make available for delivery such new Note to such Holder equal in principal
amount to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Issuers to the Holder
thereof. The Company will publicly announce the results of the Offer to
Purchase on the Purchase Date. To the extent that any amount of Excess Proceeds
remains after completion of such Offer to Purchase, the Company may use such
remaining amount for general corporate purposes, and the amount of Excess
Proceeds shall be reset to zero.
(d) The Issuers will comply, to the extent applicable, with the
requirements of Rule l4e-1 under the Exchange Act and other securities laws or
regulations in the event that an Offer to Purchase under this Section 4.9 is
required under the circumstances described therein.
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Section 4.10. Limitation on Transactions with Affiliates.
------------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, conduct any business or enter into or
permit to exist any transaction or series of related transactions (including,
but not limited to, the purchase, sale or exchange of Property, the making of
any Investment, the giving of any Guarantee or the rendering of any service)
with any Unrestricted Subsidiary or any Affiliate of the Company or any
Restricted Subsidiary other than transactions solely among any of the Company
and its Restricted Subsidiaries (an "Affiliate Transaction") unless: (i) such
business, transaction or series of related transactions is on terms no less
favorable to the Company or such Restricted Subsidiary than those that could be
obtained in a comparable arm's-length transaction between unaffiliated parties;
and (ii) with respect to an Affiliate Transaction involving an amount or having
a value in excess of $500,000, the Company delivers to the Trustee an Officers'
Certificate stating that such business, transaction or series of related
transactions complies with clause (i) above. In the case of an Affiliate
Transaction involving an amount or having a value in excess of $2,000,000 but
less than or equal to $10,000,000, the Company must obtain a Board Resolution of
the Board of Directors (including a majority of Disinterested Directors, if any)
certifying that such Affiliate Transaction complies with clause (i) above. In
the case of an Affiliate Transaction involving an amount or having a value in
excess of $10,000,000, the Company must obtain a written opinion of a nationally
recognized investment banking firm or other expert stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial point of
view. The foregoing limitation does not limit, and shall not apply to, (1) any
transaction or series of related transactions pursuant to the terms of the
Permitted Affiliate Agreements, (2) cash distributions permitted under Section
4.8(b)(v) hereof, relating to Permitted Tax Distributions, (3) the payment of
reasonable and customary fees to members of the Board of Directors of the
Company or a Restricted Subsidiary who are outside directors and (4) the payment
of reasonable and customary compensation to officers and employees of the
Company or any Restricted Subsidiary as determined by the Board of Directors
thereof in good faith. The aggregate management, consulting and similar fees
paid by the Company (excluding amounts paid pursuant to the last sentence of
this Section 4.10) (x) to Chartwell shall not exceed $750,000 during any fiscal
year and (y) to Mobil Oil shall not exceed $300,000 in any fiscal year; provided
that in each case any such fees may accrue but shall not be paid by the Company
at any time after the occurrence and during the continuance of a Default or
Event of Default until such Default or Event of Default is cured, whereupon such
accrued and unpaid fees may be paid in addition to such other permitted fees.
The Company may in addition pay advisory fees to an Affiliate of the Company
with respect to specific transactions, provided such payments would be permitted
under paragraph (a) of Section 4.8
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hereof. In addition, for purposes of this Section 4.10, any transaction or
series of related transactions between the Company or any Restricted Subsidiary
and an Affiliate of the Company that is approved by a majority of the
Disinterested Directors, if any, shall be deemed to comply with clause (i)
above. Notwithstanding the provisions of this Section 4.10, the Company may pay
fees on the Closing Date in connection with the consummation of the Transactions
as described in the Offering Memorandum.
Section 4.11. Limitations on Liens.
--------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries, directly or indirectly, to enter into, create, incur, assume or
suffer to exist any Liens of any kind, other than Permitted Liens, on or with
respect to any of its Property or assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom, without securing the Notes
and all other amounts due under this Indenture (for so long as such Lien exists)
equally and ratably with (or prior to) the obligation or liability secured by
such Lien.
Section 4.12. [INTENTIONALLY OMITTED].
Section 4.13. Limitation on Creation of Unrestricted Subsidiaries.
---------------------------------------------------
The Company may designate any Subsidiary of the Company to be an
"Unrestricted Subsidiary" as provided below, in which event such Subsidiary and
each other Person that is then or thereafter becomes a Subsidiary of such
Subsidiary will be deemed to be an Unrestricted Subsidiary. "Unrestricted
Subsidiary" means (1) any Subsidiary designated as such by the Board of
Directors as set forth below where (a) neither the Company nor any of its
Restricted Subsidiaries (i) provides credit support for, or Guarantee of, any
Debt of such Subsidiary or any Subsidiary of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Debt) or (ii) is directly
or indirectly liable for any Debt of such Subsidiary or any Subsidiary of such
Subsidiary, and (b) no default with respect to any Debt of such Subsidiary or
any Subsidiary of such Subsidiary (including any right which the holders thereof
may have to take enforcement action against such Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the Company and
its Restricted Subsidiaries to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity and (2) any Subsidiary of an Unrestricted Subsidiary. The Company will
deliver to the Trustee a copy of the Board Resolution evidencing such
designation.
The Company may designate any Subsidiary (other than PFC) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Interests of, or
owns or holds any Lien on any property of, any other Restricted Subsidiary of
the Company, provided that
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either (x) the Subsidiary to be so designated has total assets of $1,000 or less
or (y) immediately after giving effect to such designation, the Company could
incur at least $1.00 of additional Debt pursuant to paragraph (a) of Section 4.6
hereof and provided, further, that the Company could make a Restricted Payment
in an amount equal to the greater of the fair market value or book value of such
Subsidiary pursuant to Section 4.8 hereof and such amount is thereafter treated
as a Restricted Payment for the purpose of calculating the aggregate amount
available for Restricted Payments thereunder. An Unrestricted Subsidiary may be
designated as a Restricted Subsidiary if (i) all the Debt of such Unrestricted
Subsidiary could be Incurred under Section 4.6 hereof and (ii) all the Liens on
the Property and assets of such Unrestricted Subsidiary could be incurred
pursuant to Section 4.11 hereof.
Section 4.14. Limitation on Dividends and Other Payments Affecting
Restricted Subsidiaries.
----------------------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, cause or suffer to exist or become
effective or enter into any encumbrance or restriction (other than pursuant to
this Indenture, law or regulation) on the ability of any Restricted Subsidiary
to (i) pay dividends or make any other distributions on its Capital Interests or
pay any Debt or other obligation owed to the Company or any Restricted
Subsidiary thereof, (ii) make loans or advances to the Company or any Restricted
Subsidiary thereof, or (iii) transfer any of its Property or assets to the
Company or any Restricted Subsidiary of the Company, except:
(a) any encumbrance or restriction in existence on the Issue Date of
the Notes, including those required by the Credit Agreement;
(b) any encumbrance or restriction pursuant to an agreement relating
to an acquisition of property, so long as the encumbrances or restrictions
in any such agreement relate solely to the property so acquired (and are
not or were not created in anticipation of or in connection with the
acquisition thereof);
(c) any encumbrance or restriction which exists with respect to a
Person that becomes a Restricted Subsidiary or merges with or into a
Restricted Subsidiary of the Company on or after the date of initial
issuance of the Notes, which are in existence at the time such Person
becomes a Restricted Subsidiary but not created in connection with or in
anticipation of such Person becoming a Restricted Subsidiary, and which is
not applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person becoming a
Restricted Subsidiary;
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(d) any encumbrance or restriction pursuant to an agreement effecting
a permitted renewal, refunding, replacement, refinancing or extension of
Debt issued pursuant to an agreement referred to in the foregoing clauses
(a) through (c), so long as the encumbrances and restrictions contained in
any such refinancing agreement are no less favorable in any material
respect to the Holders than the encumbrances and restrictions contained in
such agreements in the reasonable judgment of the Board of Directors;
(e) customary provisions restricting subletting or assignment of any
lease or license of the Company or any Restricted Subsidiary or provisions
in agreements that restrict the assignment of such agreement or any rights
thereunder; and
(f) any restriction on the sale or other disposition of assets or
Property securing Debt as a result of a Permitted Lien on such assets or
Property.
Nothing contained in this Section 4.14 shall prevent the Company or any
Restricted Subsidiary from (i) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.11 or (ii) restricting the sale
or other disposition of Property or assets of the Company or any of its
Restricted Subsidiaries that secure Debt of the Company or any of its Restricted
Subsidiaries Incurred in accordance with this Indenture.
Section 4.15. Limitation on Sale and Lease-Back Transactions.
----------------------------------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale and Leaseback Transaction unless (i) the
consideration received in such Sale and Leaseback Transaction is at least equal
to the fair market value of the Property sold, as determined by a Board
Resolution of the Company, and (ii) immediately prior to and after giving effect
to the Attributable Debt in respect of such Sale and Leaseback Transaction, the
Company could incur at least $1.00 of additional Debt (other than Permitted
Debt) in compliance with Section 4.6 hereof.
Section 4.16. Payments for Consent.
--------------------
Neither the Company nor any of its Restricted Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes that so consent, waive or agree to amend
in the time frame set forth in
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solicitation documents relating to such consent, waiver or agreement.
Section 4.17. Partnership and Corporate Existence.
-----------------------------------
Subject to Article V hereof, the Issuers shall do or cause to be done all
things necessary to preserve and keep in full force and effect their partnership
or corporate existence, and the corporate, partnership or other existence of
each Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Subsidiaries; provided, however, that the Issuers
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Restricted Subsidiaries
(other than with respect to PFC), if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and its Restricted Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.18. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, the Issuers will make an
Offer to Purchase all of the outstanding Notes at a Purchase Price in cash equal
to 101% of the principal amount tendered, together with accrued interest, if
any, to the Purchase Date. For purposes of the foregoing, an Offer to Purchase
shall be deemed to have been made if (i) within 30 days following the date of
the consummation of a transaction or series of transactions that constitutes a
Change of Control, the Issuers commence an Offer to Purchase all outstanding
Notes at the Purchase Price (provided that the running of such 30-day period
shall be suspended, for up to a maximum of 30 days, during any period when the
commencement of such Offer to Purchase is delayed or suspended by reason of any
court's or governmental authority's review of or ruling on any materials being
employed by the Issuers to effect such Offer to Purchase, so long as the Issuers
have used and continue to use their best efforts to make and conclude such Offer
to Purchase promptly) and (ii) all Notes properly tendered pursuant to the Offer
to Purchase are purchased on the terms of such Offer to Purchase.
(b) The Issuers will not be required to make an Offer to Purchase upon a
Change of Control if a third party makes such Offer to Purchase
contemporaneously with or upon a Change of Control in the manner, at the times
and otherwise in compliance with the requirements of this Indenture and
purchases all Notes validly tendered and not withdrawn under such Offer to
Purchase.
(c) On the Purchase Date, the Issuers shall, to the extent lawful, (i)
accept for payment Notes or portions thereof or
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beneficial interests under a Global Note properly tendered pursuant to the Offer
to Purchase, (ii) deposit with the Paying Agent (by no later than 1:00 p.m. on
such date) money sufficient to pay the Purchase Price of all Notes or portions
thereof or beneficial interests so tendered and (iii) deliver or cause to be
delivered to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof tendered to the Issuers. The
Paying Agent shall promptly (1) mail to each holder of Notes so accepted and (2)
remit to the Depository for crediting to the respective accounts of the Holders
under a Global Note of beneficial interest so accepted, payment in an amount
equal to the purchase price for such Notes (which payment shall, in the case of
the Holders of beneficial interests in a Global Note, be through the facilities
of the Depository), and the Issuers shall execute and issue, and the Trustee
shall promptly authenticate and mail to such holder, a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered and shall
issue a Global Note equal in principal amount to any unpurchased portion of
beneficial interest so surrendered; provided that each such new Note shall be
issued in an original principal amount in denominations of $1,000 and integral
multiples thereof.
(d) If the Company or any Subsidiary thereof has issued any outstanding
(A) Debt that is subordinated in right of payment to the Notes or (B) Preferred
Interests, and the Company or such Subsidiary is required to make a Offer to
Purchase or to make a distribution with respect to such subordinated Debt or
Preferred Interests in the event of a Change of Control, the Company shall not
consummate any such offer or distribution with respect to such subordinated Debt
or Preferred Interests until such time as the Company shall have paid the
Purchase Price in full to the holders of Notes that have accepted the Company's
Offer to Purchase and shall otherwise have consummated the Offer to Purchase
made to holders of the Notes. The Company will not issue Debt that is
subordinated in right of payment to the Notes or Preferred Interests with change
of control provisions requiring the payment of such Debt or Preferred Interests
prior to making and consummating an offer to purchase the Notes in the event of
a Change of Control under this Indenture.
(e) The Issuers will comply, to the extent applicable, with the
requirements of Rule l4e-1 under the Securities Exchange Act of 1934 and other
securities laws or regulations in connection with any repurchase of the Notes as
described above.
Section 4.19. Maintenance of Office or Agency.
-------------------------------
The Issuers shall maintain in New York, New York an office or agency where
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Issuers in
respect of the Notes and this Indenture may be served. The Issuers shall give
prompt written notice to the Trustee of the location, and any
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change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee as set
forth in Section 11.2. The Issuers may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations, provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligation to maintain an office or
agency in New York, New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of such designation or rescission and of any
change in the location of any such other office or agency. The Issuers hereby
initially designate the Corporate Trust Office of the Trustee set forth in
Section 11.2 as such office of the Company.
Section 4.20. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall cause all material properties used or useful to the
conduct of its business or the business of any of its Restricted Subsidiaries to
be maintained and kept in good condition, repair and working order (reasonable
wear and tear excepted) and supplied with all equipment deemed necessary in the
good faith judgment of the Officers of the Company and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof; provided, however, that nothing in this Section 4.20 shall prevent the
Company or any Restricted Subsidiary from discontinuing the operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is in the good faith judgment of the Board of
Directors of the Company or the Restricted Subsidiary concerned, as the case may
be, desirable in the conduct of the business of the Company or such Restricted
Subsidiary, as the case may be, and is not adverse in any material respect to
the Holders.
(b) The Company shall provide or cause to be provided, for itself and each
of its Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that are adequate and appropriate for the
conduct of the business of the Company and such Restricted Subsidiaries in a
prudent manner, with reputable insurers or with the government of the United
States of America or an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be customary, in the good faith
judgment of the Company, for corporations similarly situated in the industry.
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ARTICLE V.
SUCCESSOR CORPORATION
---------------------
Section 5.1. Limitation on Merger, Conveyance, Transfer and Lease.
----------------------------------------------------
(a) The Company will not, and will not permit any Restricted Subsidiary
to, in any transaction or series of transactions, consolidate with or merge into
any other Person (other than a merger of a Restricted Subsidiary into the
Company in which the Company is the continuing Person or the merger of a
Restricted Subsidiary into or with another Restricted Subsidiary or another
Person that as a result of such transaction becomes a Restricted Subsidiary), or
transfer all or substantially all of the assets of the Company and its
Restricted Subsidiaries, taken as a whole, to any other Person, unless:
(i) either (a) the Company shall be the continuing Person or (b) the
Person (if other than the Company) formed by such consolidation or into
which the Company is merged, or the Person that acquires, by sale,
assignment, conveyance, transfer, lease or disposition, all or
substantially all of the property and assets of the Company (such Person,
the "Surviving Entity"), (1) shall be a corporation, partnership, limited
liability company or similar entity organized and validly existing under
the laws of the United States, any political subdivision thereof or any
state thereof or the District of Columbia, and (2) shall expressly assume,
by a supplemental indenture, the due and punctual payment of all amounts
due in respect of the principal, Redemption Price or Purchase Price of, and
accrued interest on, all the Notes and the performance of the covenants and
obligations of the Issuers under this Indenture;
(ii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including,
without limitation, any Debt Incurred or anticipated to be Incurred in
connection with or in respect of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing or would result therefrom;
(iii) immediately after giving effect to any such transaction or
series of transactions on a pro forma basis (including, without limitation,
any Debt Incurred or anticipated to be Incurred in connection with or in
respect of such transaction or series of transactions) as if such
transaction or series of transactions had occurred on the first day of the
determination period, the Company (or the Surviving Entity if the Company
is not continuing) could Incur $1.00 of additional Debt (other than
Permitted Debt) under paragraph (a) of Section 4.6 hereof; and
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(iv) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any Debt
Incurred or anticipated to be Incurred in connection with or in respect of
such transaction or series of transactions), the Company (or the Surviving
Entity if the Company is not continuing) shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
provided, however, that, if, in the good faith determination of the Board of
Directors of the Company, (I) the purpose of such transaction is (A) to continue
the Company as a corporation or (B) to change the state of organization of the
Company or a Restricted Subsidiary, and (II) no material adverse effect on the
creditworthiness of the Company (or the Surviving Entity if the Company is not
continuing) and its Restricted Subsidiaries, taken as a whole, shall result as a
consequence of the transaction, then clauses (iii) and (iv) above shall not
apply; it being recognized that such reorganization shall not be considered to
have a material adverse effect on the creditworthiness of the Company solely
because the Surviving Entity is subject to income taxation.
For all purposes of this Indenture and the Notes, Subsidiaries of any
Surviving Entity will, upon such transaction or series of transactions, become
Restricted Subsidiaries or Unrestricted Subsidiaries as provided pursuant to
this Indenture and all Debt, and all Liens on property or assets, of the
Surviving Entity and its Subsidiaries that was not Debt, or were not Liens on
Property or assets, of the Company and its Subsidiaries immediately prior to
such transaction or series of transactions shall be deemed to have been Incurred
upon such transaction or series of transactions.
(b) In connection with any consolidation, merger or transfer of assets
contemplated by this Section 5.1, the Company shall deliver or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this Section 5.1 and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
Section 5.2. Successor Person Substituted.
----------------------------
Upon any transaction or series of transactions that are of the type
described in, and are effected in accordance with, conditions described in
Section 5.1 herein, the Surviving Entity shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or PFC, as the case
may be, under this Indenture with the same effect as if such Surviving Entity
had been named as the Company or PFC therein; and when a
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Surviving Person duly assumes all of the obligations and covenants of the
Company or PFC, as the case may be, pursuant to this Indenture and the Notes,
except in the case of a lease, the predecessor Person shall be relieved of all
such obligations.
ARTICLE VI.
DEFAULTS AND REMEDIES
---------------------
Section 6.1. Events of Default.
-----------------
Each of the following is an "Event of Default":
(1) default in the payment in respect of the principal, Redemption
Price or Purchase Price of, and accrued interest on, any Note at its
maturity (whether at Stated Maturity or upon repurchase, acceleration,
optional redemption or otherwise);
(2) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 30
days;
(3) default in the making of an Offer to Purchase as required by this
Indenture;
(4) failure to perform or comply with Section 5.1 hereof;
(5) except as permitted by this Indenture, any Guarantee shall for any
reason cease to be, or it shall be asserted by any Guarantor or the Company
or PFC not to be, in full force and effect and enforceable in accordance
with its terms;
(6) default in the performance, or breach, of any covenant or
agreement of an Issuer or any Guarantor in this Indenture (other than a
covenant or agreement a default in whose performance or whose breach is
specifically dealt with in (1), (2), (3), (4) or (5) above), and
continuance of such default or breach for a period of 30 days after written
notice thereof has been given to the Issuers by the Trustee or to the
Issuers and the Trustee by the Holders of at least 25% in aggregate
principal amount of the outstanding Notes;
(7) a default or defaults under any bonds, debentures, notes or other
evidences of Debt (other than the Notes) by the Company or any Restricted
Subsidiary having, individually or in the aggregate, a principal or similar
amount outstanding of at least $5,000,000, whether such Debt now exists or
shall hereafter be created, which default or defaults shall have resulted
in the acceleration of the maturity of such Debt prior to its express
maturity
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or shall constitute a failure to pay such Debt when due and payable after
the expiration of any applicable grace period with respect thereto;
(8) the entry against the Company or any Restricted Subsidiary of a
final judgment or final judgments for the payment of money in an aggregate
amount in excess of $5,000,000 by a court or courts of competent
jurisdiction, which judgments remain undischarged, unwaived, unstayed,
unbonded or unsatisfied for a period of 60 consecutive days; or
(9) the Company or any Significant Subsidiary or any Guarantor
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors,
or
(E) generally is not paying its debts as they become due; or
(10) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary or any Guarantor in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Subsidiary or any Guarantor or for all or substantially all of the
property of the Company or any Significant Subsidiary or any
Guarantor, or
(C) orders the liquidation of the Company or any Significant
Subsidiary or any Guarantor,
and, in each case, the order or decree remains unstayed and in effect for
60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
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The Trustee may withhold notice to the Holders of the Notes of any Default
(except in payment of principal, Redemption Price or Purchase Price of, and
accrued interest on, the Notes) if the Trustee considers it to be in the best
interest of the Holders of the Notes to do so.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding payment of the premium that the Issuers would have had
to pay if the Issuers then had elected to redeem the Notes pursuant to Section
3.7(a) hereof, an equivalent premium shall also become and be immediately due
and payable to the extent permitted by law upon the acceleration of the Notes.
If an Event of Default occurs prior to the first date on which the Issuers could
redeem the Notes pursuant to Section 3.7(a) hereof, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding the prohibition on redemption of the Notes prior to
such first date, then the greatest premium specified in Section 3.7(a)
(expressed as a percentage of the principal amount that would otherwise be due)
shall also become immediately due and payable to the extent permitted by law
upon acceleration of the Notes.
Section 6.2. Acceleration.
------------
If an Event of Default (other than an Event of Default specified in Section
6.1(9) or (10) above) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes may declare the principal of the Notes and any accrued
interest on the Notes to be due and payable immediately by a notice in writing
to the Issuers (and to the Trustee if given by Holders); provided, however, that
after such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of the outstanding Notes
may rescind and annul such acceleration if all existing Events of Default, other
than the non-payment of accelerated principal of, and accrued interest on, the
Notes, have been cured or waived as provided in this Indenture. If an Event of
Default specified in Section 6.1(9) or (10) hereof occurs, the principal,
Redemption Price or Purchase Price of, and accrued interest on, the Notes then
outstanding shall ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
Section 6.3. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal, Redemption Price or Purchase Price of, and accrued interest on, the
Notes or to enforce the performance of any provision of the Notes or this
Indenture and
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may take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party. The Trustee
may maintain a proceeding even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Noteholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults and Events of Default.
---------------------------------------------
Subject to Sections 6.2, 6.7 and 8.2 hereof, the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes may on behalf of
the Holders of all the Notes waive any past default under this Indenture and its
consequences, except a default (1) in any payment in respect of the principal,
Redemption Price or Purchase Price of, and accrued interest on, any Notes
(including any Note which is required to have been purchased pursuant to an
Offer to Purchase which has been made by the Issuers), or (2) in respect of a
covenant or provision hereof which under this Indenture cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereto.
Section 6.5. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Notes then outstanding
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee by this Indenture. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of another Noteholder not
taking part in such direction, and the Trustee shall have the right to decline
to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by a Trust Officer, determine that the proceedings
so directed, or the exercise of such trust or power, may involve it in personal
liability; provided that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
Section 6.6. Limitation on Suits.
-------------------
Subject to Section 6.7 hereof, no Holder of any Note will have any right to
institute any proceeding with respect to this Indenture or for any remedy
thereunder, unless such Holder shall
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have previously given to the Trustee written notice of a continuing Event of
Default and unless the Holders of at least 25% in aggregate principal amount of
the outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days. A
Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 6.7. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, Redemption Price or Purchase
Price of, and accrued interest on, the Note on or after the respective due dates
expressed in the Note, or to bring suit for the enforcement of any such payment
on or after such respective dates, is absolute and unconditional and shall not
be impaired or affected without the consent of the Holder.
Section 6.8. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal, Redemption Price or
Purchase Price of, or accrued interest on, the Notes specified in Section 6.1(1)
or (2) hereof occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Issuers or the
Guarantors (or any other obligor on the Notes) for the whole amount of unpaid
principal, Redemption Price, Purchase Price of, and accrued interest on, the
Notes remaining unpaid, together with interest on overdue principal, Redemption
Price or Purchase Price, and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the rate
then borne by the Notes, and such further amounts as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, including all sums due and owing to the Trustee pursuant to Section
7.7.
Section 6.9. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Noteholders allowed
in any judicial proceedings relative to the Issuers or the Guarantors (or any
other obligor upon the Notes), their creditors or their property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable
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on any such claims and to distribute the same after deduction of its reasonable
charges and expenses to the extent that any such charges and expenses are not
paid out of the estate in any such proceedings and any custodian in any such
judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Noteholder any plan or reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceedings.
Section 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article VI, it shall pay
out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.7 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, Redemption Price or Purchase Price of, and accrued interest as to
each, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes; and
THIRD: to the Issuers or, to the extent the Trustee collects any amount
from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 hereof or a suit by Holders of more than 10% in principal amount of the
Notes then outstanding.
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Section 6.12. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every case, subject to any determination in such
proceeding, the Issuers, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE VII.
TRUSTEE
-------
Section 7.1. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the same circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture but, in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.1.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is
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proved that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.2 and 6.5 hereof.
(4) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
satisfactory to it against such risk or liability is not reasonably assured
to it.
(d) Whether or not therein expressly so provided, paragraphs (a), (b),
(c), (e), (f) and (g) of this Section 7.1 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity reasonably satisfactory to it against any
loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company or any Guarantor.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by the law.
(g) The Trustee shall not be deemed to have notice of any fact or matter
with respect hereto, including without limitation, the occurrence of a Default
or Event of Default, unless such fact or matter is actually known by a Trust
Officer charged with responsibility for administering this Indenture or unless
in writing received by the Trustee and making specific reference to this
Indenture.
Section 7.2. Rights of Trustee.
-----------------
Subject to Section 7.1 hereof:
(1) The Trustee may rely on and shall be protected in acting or refraining
from acting upon any document (including without limitation any Company Request
or Officers' Certificate) reasonably believed by it to be genuine and to have
been signed or presented by the proper person. The Trustee need not investigate
any fact or matter stated in any document.
(2) Before the Trustee acts or refrains from acting, including whenever
the Trustee deems it desirable that a matter be proved or established prior to
it acting or refraining from acting, it may require an Officers' Certificate or
an Opinion of Counsel, or both, which shall conform to the provisions of
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Section 11.5 hereof. The Trustee shall be protected and shall not be liable for
any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(3) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent (other than the negligence or willful
misconduct of an agent who is an employee of the Trustee) appointed by it with
due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers; provided that the Trustee's conduct does not constitute
negligence or bad faith.
(5) The Trustee may consult with counsel of its selection, and the advice
or opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
Section 7.3. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may make loans to, accept deposits from, perform services
for or otherwise deal with the Issuers or any Guarantor, or any Affiliates
thereof, with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, shall be subject to
Sections 7.10 and 7.11 hereof.
Section 7.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Notes, it shall not be accountable for the Issuers' use of the
proceeds from the sale of Notes or any money paid to the Company pursuant to the
terms of this Indenture and it shall not be responsible for any statement in the
Notes or any document used in connection with the sale of the Notes other than
its certificate of authentication.
Section 7.5. Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Noteholder notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of the principal,
Redemption Price or Purchase Price of, and accrued interest on, any Note, the
Trustee may withhold the notice if and so long as the board of directors of the
Trustee, the executive committee or any trust committee of such board and/or its
Trust Officers in good faith determine(s) that withholding the notice is in the
interest of the Noteholders.
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Section 7.6. Reports by Trustee to Holders.
-----------------------------
If required by TIA (S) 313(a), within 60 days after May 15 of any year,
commencing the May 15 following the date of this Indenture, the Trustee shall
mail to each Noteholder a brief report dated as of such May 15 that complies
with TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA (S) 313(c)
and TIA (S) 313(d). A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed. The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
Section 7.7. Compensation and Indemnity.
--------------------------
The Issuers and the Guarantors jointly and severally shall pay to the
Trustee from time to time such reasonable compensation as shall be agreed in
writing between the Issuers and the Trustee for its services hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Issuers and the Guarantors
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it in connection with its duties under
this Indenture, including the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Issuers and the Guarantors, jointly and severally, agree to indemnify
each of the Trustee and any predecessor Trustee for, and hold it harmless
against, any and all loss, damage, claim, liability, reasonable expense
(including but not limited to reasonable attorneys' fees and expenses) or taxes
(other than taxes based on the income of the Trustee) incurred by it in
connection with the acceptance or performance of its duties under this Indenture
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder (including, without limitation, settlement costs).
The Trustee shall notify the Issuers and the Guarantors in writing promptly of
any claim asserted against the Trustee for which it may seek indemnity.
However, the failure by the Trustee to so notify the Issuers and the Guarantors
shall not relieve the Issuers or the Guarantors of their obligations hereunder.
Notwithstanding the foregoing, the Issuers and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Issuers and the Guarantors in this Section
7.7, the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee in its capacity as such, except such money or
property held in trust to pay principal, Redemption Price or Purchase Price of,
and accrued
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interest on, particular Notes. The obligations of the Issuers and the Guarantors
under this Section 7.7 to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall be joint and several
liabilities of the Company and each of the Guarantors and shall survive the
satisfaction and discharge of this Indenture, including the termination or
rejection hereof in any bankruptcy proceeding to the extent permitted by law.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(9) or (10) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.7, the term "Trustee" shall include any
trustee appointed pursuant to Article 9.
Section 7.8. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company and the Guarantors in
writing, such resignation to become effective upon the appointment of a
successor Trustee. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the removed Trustee in
writing and may appoint a successor Trustee with the Company's written consent
which consent shall not be unreasonably withheld. The Company may remove the
Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or any
Holder of outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee. If the Trustee fails to comply with
Section 7.10 hereof, any Noteholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers.
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Immediately following such delivery, the retiring Trustee shall, subject to its
rights under Section 7.7 hereof, transfer all property held by it as Trustee to
the successor Trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of the
Trustee pursuant to this Section 7.8, the Issuers' obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Consolidation, Merger or Conversion.
--------------------------------------------------------
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation or
national banking association, subject to Section 7.10 hereof, the successor
corporation or national banking association without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5) in every respect. The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b), including the provision in (S) 310(b)(1); provided that there shall
be excluded from the operation of TIA (S) 310(b)(1) any indenture or indentures
under which other securities, or conflicts of interest or participation in other
securities, of the Issuers or the Guarantors are outstanding if the requirements
for exclusion set forth in TIA (S) 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Issuers.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
Section 7.12. Paying Agents.
-------------
The Issuers shall cause each Paying Agent other than the Trustee or an
Affiliate of the Trustee to execute and deliver to it and the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section 7.12:
(A) that it will hold all sums held by it as agent for the payment of
principal, Redemption Price or Purchase Price of, and accrued interest on,
the Notes (whether such sums have been paid to it by the Issuers or by any
obligor on
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the Notes) in trust for the benefit of Holders of the Notes or the Trustee;
(B) that it will at any time during the continuance of any Event of
Default, upon written request from the Trustee, deliver to the Trustee all
sums so held in trust by it together with a full accounting thereof; and
(C) that it will give the Trustee written notice within three (3)
Business Days of any failure of the Issuers (or by any obligor on the
Notes) in the payment of any installment of the principal, Redemption Price
or Purchase Price of, and accrued interest on, the Notes when the same
shall be due and payable.
ARTICLE VIII.
AMENDMENT, SUPPLEMENT AND WAIVER
--------------------------------
Section 8.1. Without Consent of Holders.
--------------------------
Without the consent of any Holders, the Issuers, the Guarantors, if any,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental to this Indenture for any of the following purposes:
(1) to evidence the succession of another Person to the Issuers and the
assumption by any such successor of the covenants of the Issuers in this
Indenture and in the Notes; or
(2) to add to the covenants of the Issuers for the benefit of the Holders,
or to surrender any right or power herein conferred upon the Issuers; or
(3) to add additional Events of Default; or
(4) to provide for uncertificated Notes in addition to or in place of
the certificated Notes; or
(5) to evidence and provide for the acceptance of appointment under
this Indenture by a successor Trustee; or
(6) to secure the Notes, to add a Guarantor in accordance with Section
10.1 hereof or to release a Guarantor in accordance with Section 10.4 hereof; or
(7) to cure any ambiguity, to correct or supplement any provision in this
Indenture which may be defective or inconsistent with any other provision in
this Indenture, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such actions pursuant to
this clause shall not adversely affect the interests of the Holders in any
material respect; or
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(8) to comply with any requirements of the Commission in order to effect
and maintain the qualification of this Indenture under the Trust Indenture Act.
The Trustee is hereby authorized to join with the Issuers and the
Guarantors, if any, in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 8.2. With Consent of Holders.
-----------------------
With the consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Notes, the Issuers, the Guarantors, if any,
and the Trustee may enter into an indenture or indentures supplemental to this
Indenture for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture, including the definitions
therein; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each outstanding Note affected thereby:
(1) change the Stated Maturity of any Note or of any installment of
interest on any Note, or reduce the amount payable in respect of the principal
thereof or the rate of interest thereon or any premium payable thereon, or
reduce the amount that would be due and payable on acceleration of the maturity
thereof, or change the place of payment where, or the coin or currency in which,
any Note or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof; or
(2) reduce the percentage in aggregate principal amount of the outstanding
Notes, the consent of whose Holders if required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
thereunder and their consequences) provided for in this Indenture; or
(3) modify the obligations of the Issuers to make Offers to Purchase upon
a Change of Control or from the Excess Proceeds of Asset Sales; or
(4) subordinate, in right of payment, the Notes to any other Debt of
the Issuers; or
(5) modify any of the provisions of this proviso to Section 8.2 or
provisions relating to waiver of defaults or certain covenants contained in
Section 6.2, 6.4 or 6.7 hereof, except to increase any such percentage required
for such actions or to
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provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Note affected
thereby, or
(6) release any Guarantees required to be maintained under this Indenture.
After a modification, amendment, supplement or waiver under this Section
8.2 becomes effective, the Issuers shall mail to the Holders a notice briefly
describing the modification, amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such modification, amendment,
supplement or waiver.
It shall not be necessary for the consent of the Holders under this Section
8.2 to approve the particular form of any proposed amendment, modification,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.3. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
Section 8.4. Revocation and Effect of Consents.
---------------------------------
Until a modification, amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the notice of revocation before the date the modification, amendment,
supplement, waiver or other action becomes effective.
The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any modification,
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such modification, amendment, supplement, or waiver or to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 120 days after such record date unless the consent of the requisite
number of Holders has been obtained. After a modification, amendment,
supplement, waiver or other action becomes effective, it shall bind every
Noteholder, unless it makes a change
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described in any of clauses (1) through (6) of Section 8.2 hereof. In that case,
the modification, amendment, supplement, waiver or other action shall bind each
Holder of a Note who has consented to it and every subsequent Holder of a Note
or portion of a Note that evidences the same debt as the consenting Holder's
Note.
Section 8.5. Notation on or Exchange of Notes.
--------------------------------
If a modification, amendment, supplement or waiver changes the terms of a
Note, the Trustee may request the Holder of the Note to deliver it to the
Trustee. In such case, the Trustee shall place an appropriate notation on the
Note about the changed terms and return it to the Holder. Alternatively, if the
Issuers or the Trustee so determine, the Issuers in exchange for the Note shall
issue and the Trustee shall authenticate a new security that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such modification, amendment,
supplement or waiver.
Section 8.6. Trustee To Sign Amendments, etc.
-------------------------------
The Trustee shall sign any modification, amendment, supplement or waiver
authorized pursuant to this Indenture if the modification, amendment, supplement
or waiver does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such modification, amendment, supplement or
waiver, the Trustee shall be entitled to receive and, subject to Section 7.1
hereof, shall be fully protected in relying upon an Officers' Certificate and an
Opinion of Counsel stating that such modification, amendment, supplement or
waiver is authorized or permitted by this Indenture and such supplemental
indenture constitutes the legal, valid and binding obligation of the Issuers and
the Guarantors enforceable against each of them in accordance with its terms
(subject to customary exceptions). Neither the Issuers nor any Guarantor may
sign a modification, amendment or supplement until the Board of Directors of the
Issuers or such Guarantor, as appropriate, approves it.
ARTICLE IX.
DISCHARGE OF INDENTURE; DEFEASANCE
----------------------------------
Section 9.1. Discharge of Indenture.
----------------------
The Issuers and the Guarantors may terminate their obligations under this
Indenture, except the obligations referred to in the last paragraph of this
Section 9.1 when (1) either: (A) all Notes theretofore authenticated and
delivered have been delivered to the Trustee for cancellation, or (B) all such
Notes not theretofore delivered to the Trustee for cancellation (i) have become
due and payable, or (ii) will become due and payable
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within 60 days or are to be called for redemption within 60 days (a "Discharge")
under irrevocable arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Issuers, and the Issuers have irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
indebtedness on the Notes, not theretofore delivered to the Trustee for
cancellation, for principal, Redemption Price of, and accrued interest on, the
Notes to the Stated Maturity or date of redemption; (2) the Issuers have paid or
caused to be paid all other sums then due and payable hereunder by the Issuers;
and (3) the Issuers have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent under this
Indenture relating to the satisfaction and discharge of this Indenture have been
complied with.
After such delivery the Trustee upon request shall acknowledge in writing
the satisfaction and discharge of the Issuers' and the Guarantors' obligations
under the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuers in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 4.19, 9.5,
9.6 and 9.8, the rights, powers, duties and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.7 hereof), the provisions of Article III and the Trustee's and Paying Agent's
obligations in Section 9.8 shall survive until the Notes are no longer
outstanding. Upon such satisfaction and discharge, only the obligations of the
Issuers in Sections 2.7, 7.7, 9.5, 9.6 and 9.8 hereof shall survive.
Section 9.2. Legal Defeasance
----------------
The Issuers may at their option, by Board Resolution, be discharged from
their obligations with respect to the Notes and the Guarantors, if any,
discharged from their obligations under the Guarantees, if any, on the date the
conditions set forth in Section 9.4 below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Issuers
shall be deemed to have paid and discharged the entire indebtedness represented
by the Notes and to have satisfied all their other obligations under such Notes
and this Indenture insofar as such Notes are concerned (and the Trustee, at the
expense of the Issuers, shall, subject to Section 9.6 hereof, execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of outstanding Notes to receive solely from the trust funds described in
Section 9.4 hereof and as more fully set forth in such Section, payments in
respect of the principal, Redemption Price of, and accrued interest on, such
Notes when such payments
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are due, (B) the Issuers' obligations with respect to such Notes under Sections
2.3, 2.4, 2.5, 2.6, 2.7, 2.8 and 4.19 hereof, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder (including claims of, or payments
to, the Trustee under or pursuant to Section 7.7 hereof), (D) Article III and
(E) this Article IX. Subject to compliance with this Article IX, the Issuers may
exercise their option under this Section 9.2 with respect to the Note
notwithstanding the prior exercise of its option under Section 9.3 below with
respect to the Notes.
Section 9.3. Covenant Defeasance.
-------------------
At the option of the Issuers, pursuant to a Board Resolution, the Issuers
and the Guarantors, if any, shall be released from their respective obligations
under Sections 4.2 through 4.18 hereof, inclusive, Section 4.20, clause (a)(ii)
of Section 5.1 hereof (with respect to Sections 4.2 through 4.18 hereof,
inclusive, and Section 4.20), Sections 6.1(3) and 6.1(7), clause (a)(iii) of
Section 5.1 hereof and clause (a)(iv) of Section 5.1 hereof, with respect to the
outstanding Notes on and after the date the conditions set forth in Section 9.4
hereof are satisfied (hereinafter, "Covenant Defeasance"), any omission to
comply with such obligations shall not constitute a Default or Event of Default,
and the Notes shall thereafter be deemed not to be outstanding for purposes of
any direction, waiver, consent, declaration or act of the Holders (and the
consequences thereof) in connection with such covenants but shall continue to be
outstanding for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that the Issuers and the Guarantors, if any, may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such specified Section or portion thereof, whether directly or
indirectly by reason of any reference elsewhere herein to any such specified
Section or portion thereof or by reason of any reference in any such specified
Section or portion thereof to any other provision herein or in any other
document, but the remainder of this Indenture and the Notes shall be unaffected
thereby.
Section 9.4. Conditions to Legal Defeasance or Covenant Defeasance.
-----------------------------------------------------
The following shall be the conditions to application of Section 9.2 or
Section 9.3 hereof to the outstanding Notes:
(1) the Issuers must irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 7.10
hereof who shall agree to comply with the provisions of this Article IX
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to the benefits of the Holders of such Notes: (A) money in an amount, or (B)
U.S. Government Obligations which through the scheduled payment of principal and
interest in respect thereof in
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accordance with their terms will provide, not later than the due date of any
payment, money in an amount, or (C) a combination thereof, in each case
sufficient without reinvestment, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and discharge, the entire
indebtedness in respect of the principal, Redemption Price of, and accrued
interest on, such Notes on the Stated Maturity thereof or (if the Issuers have
made irrevocable arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name and at the expense of the
Issuers) the Redemption Date thereof, as the case may be, in accordance with the
terms of this Indenture and such Notes;
(2) in the case of Legal Defeasance, the Issuers shall have delivered to
the Trustee an Opinion of Counsel stating that (A) the Issuers have received
from, or there has been published by, the Internal Revenue Service a ruling or
(B) since the date of this Indenture, there has been a change in the applicable
federal income tax law, in either case (A) or (B) to the effect that, and based
thereon such opinion shall confirm that, the Holders of such Notes will not
recognize gain or loss for federal income tax purposes as a result of the Legal
Defeasance to be effected with respect to such Notes and will be subject to
federal income tax on the same amount, in the same manner and at the same times
as would be the case if such Legal Defeasance were not to occur;
(3) in the case of Covenant Defeasance, the Issuers shall have delivered
to the Trustee an Opinion of Counsel to the effect that the Holders of such
outstanding Notes will not recognize gain or loss for federal income tax
purposes as a result of the Covenant Defeasance to be effected with respect to
such Notes and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would be the case if such Covenant
Defeasance were not to occur;
(4) no Default or Event of Default with respect to the outstanding Notes
shall have occurred and be continuing at the time of such deposit after giving
effect thereto or, in the case of Legal Defeasance, either: (A) the Issuers
shall have delivered to the Trustee an Opinion of Counsel to the effect that,
based upon existing precedents, if the matter were properly briefed, a court
should hold that the deposit of moneys and/or U.S. Government Obligations as
provided in clause (1) of this Section 9.4 would not constitute a preference
voidable under Section 547 or 548 of the federal bankruptcy laws; or (B) no
Default or Event of Default relating to bankruptcy or insolvency shall have
occurred and be continuing at any time on or prior to the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until after such 91st day);
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(5) such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the TIA (assuming
all Notes are in default within the meaning of such Act);
(6) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which either of the Issuers is a party or by which it is bound;
(7) such Legal Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder; and
(8) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Legal Defeasance or Covenant Defeasance have been
complied with.
Section 9.5. Deposited Money and U.S. Government Obligations To
Be Held in Trust; Other Miscellaneous Provisions
--------------------------------------------------
All money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee pursuant to Section 9.4 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Notes, of all sums due and to become due thereon in respect of
principal, Redemption Price or Purchase Price of, and accrued interest on, the
Notes, but such money need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no duty to invest such money
or U.S. Government Obligations. The Issuers and the Guarantors shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
9.4 hereof or the principal, Redemption Price of, and accrued interest on, the
Notes received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article IX to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 9.4
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
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Section 9.6. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.1, 9.2 or 9.3 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the obligations of the Issuers and any Guarantor under this
Indenture, the Notes and the Guarantees, if any, shall be revived and reinstated
as though no deposit had occurred pursuant to this Article IX until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 9.1 hereof; provided, however,
that if the Issuers or any Guarantors have made any payment of principal,
Redemption Price of, and accrued interest on, any Notes because of the
reinstatement of their Obligations, the Issuers or such Guarantors, as the case
may be, shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
Section 9.7. Moneys Held by Paying Agent.
---------------------------
In connection with the satisfaction and discharge of this Indenture, all
moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Issuers, be paid to the Trustee, or if sufficient
moneys have been deposited pursuant to Section 9.1 or 9.4 hereof, to the Issuers
(or, if such moneys had been deposited by any Guarantors, to such Guarantors),
and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
Section 9.8. Moneys Held by Trustee.
----------------------
Any moneys deposited with the Trustee or any Paying Agent or then held by
the Issuers or any Guarantors in trust for the payment of the principal,
Redemption Price or Purchase Price of, and accrued interest on, any Note that
are not applied but remain unclaimed by the Holder of such Note for two years
after the date upon which the principal, Redemption Price or Purchase Price of,
and accrued interest on, such Note shall have respectively become due and
payable shall be repaid to the Issuers (or, if appropriate, the Guarantors) upon
Company Request, or if such moneys are then held by the Issuers or any
Guarantors in trust, such moneys shall be released from such trust; and the
Holder of such Note entitled to receive such payment shall thereafter, as an
unsecured general creditor, look only to the Issuers and the Guarantors, if any,
for the payment thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however, that
the Trustee or any such Paying Agent, before being required to make any such
repayment, may, at the expense of the Issuers and the Guarantors, if any, either
mail to each Noteholder affected, at the address shown in the register of the
Notes maintained by the Registrar
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pursuant to Section 2.3 hereof, or cause to be published once a week for two
successive weeks, in a newspaper published in the English language, customarily
published each Business Day and of general circulation in The City of New York,
New York, a notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
mailing or publication, any unclaimed balance of such moneys then remaining will
be repaid to the Issuers. After payment to the Issuers or the Guarantors, if
any, or the release of any money held in trust by the Issuers or any Guarantors,
as the case may be, Noteholders entitled to the money must look only to the
Issuers and any Guarantors for payment as general creditors unless applicable
abandoned property law designates another person.
ARTICLE X.
GUARANTEE OF NOTES
------------------
Section 10.1. Guarantee.
---------
Each future direct and indirect Significant Subsidiary and each other
Restricted Subsidiary of the Company that executes a Guarantee in connection
with any other Debt of the Company or any Restricted Subsidiary or otherwise
Incurs Debt (including Permitted Debt) other than under the Credit Agreement for
so long as such other Debt is so guaranteed or outstanding, shall execute a
Guarantee substantially in the form set forth in Exhibit E hereto and a related
supplemental indenture. Subject to the provisions of this Article X, each
Guarantor, by execution of a Guarantee substantially in the form set forth in
Exhibit E hereto and a related supplemental indenture, will jointly and
severally unconditionally guarantee to each Holder and to the Trustee, on behalf
of the Holders, (i) the due and punctual payment of the principal, Redemption
Price or Purchase Price of, and accrued interest on, each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal,
Redemption Price or Purchase Price of, and accrued interest on, the Notes, to
the extent lawful, and the due and punctual performance of all other Obligations
of the Issuers to the Holders or the Trustee all in accordance with the terms of
such Note and this Indenture, and (ii) in the case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, at stated maturity, by acceleration or otherwise.
Under Section 4.11 hereof, if a Restricted Subsidiary secures any Guarantee of
other Debt, it will secure its Guarantee of the Notes equally and ratably with
such other Debt, except that this requirement will not apply to Liens to secure
such Restricted Subsidiary's Guarantee of Debt which is secured by Permitted
Liens. Each Guarantor, by execution of the Guarantee and a related supplemental
indenture agrees that its obligations
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thereunder and hereunder shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of
any such Note or this Indenture, any failure to enforce the provisions of any
such Note or this Indenture, any waiver, modification or indulgence granted to
the Issuers with respect thereto by the Holder of such Note or the Trustee, or
any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or such Guarantor.
Each Guarantor, by execution of the Guarantee and the related supplemental
indenture, waives diligence, presentment, filing of claims with a court in the
event of merger or bankruptcy of either of the Issuers, any right to require a
proceeding first against either of the Issuers, protest or notice with respect
to any such Note or the Debt evidenced thereby and all demands whatsoever, and
will covenant that the Guarantee will not be discharged as to any such Note
except by payment in full of the principal, Redemption Price, or Purchase Price
of, and accrued interest on such Note, and as provided in Sections 9.1 and 9.2
hereof and as provided in Section 10.4 hereof. Each Guarantor, by execution of
the Guarantee and the related supplemental indenture, will further agree that,
as between such Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the Obligations guaranteed by the Guarantee
may be accelerated as provided in Article VI hereof for the purposes of the
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed thereby, and (ii) in
the event of any declaration of acceleration of such Obligations as provided in
Article VI hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of the
Guarantee. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article VI hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided for
in this Article X and not discharged. Failure to make such demand shall not
affect the validity or enforceability of the Guarantee upon any Guarantor. A
Guarantee shall not be valid or become obligatory for any purpose with respect
to a Note unless the certificate of authentication on such Note shall have been
signed by or on behalf of the Trustee.
Section 10.2. Execution and Delivery of Guarantees.
------------------------------------
A Guarantee shall be executed on behalf of a Guarantor by the manual or
facsimile signature of an Officer of such Guarantor.
If an Officer of a Guarantor whose signature is on the Guarantee no longer
holds that office, such Guarantee shall be valid nevertheless.
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Section 10.3. Limitation of Guarantee.
-----------------------
The obligations of each Guarantor will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law. Each Guarantor that makes a payment or distribution under a
Guarantee shall be entitled to a contribution from each other Guarantor in a pro
rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
Section 10.4. Release of Guarantor.
--------------------
(a) A Guarantor shall be deemed automatically and unconditionally released
and discharged from all of its obligations under its Guarantee without any
further action on the part of the Trustee or any Holder; if:
(i) the Guarantor has sold all or substantially all of its assets to
any Person that is not an Affiliate of the Company or the Issuers and each
of their Restricted Subsidiaries have sold or otherwise transferred, by way
of merger, consolidation or otherwise, all of the Capital Interests of the
Guarantor owned by them to a Person that is not an Affiliate of the
Company, in each case in a transaction in compliance with Sections 4.9 and
5.1 hereof to the extent applicable, provided that the Net Proceeds of such
sale or other disposition are applied in accordance with Section 4.9
hereof; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, an Issuer or another
Guarantor in a transaction in compliance with Section 5.1 hereof;
and in each such case, the Issuers have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions and the release of
such Guarantor have been complied with. The Trustee shall execute and deliver
an appropriate instrument or instruments evidencing such release upon receipt of
a Company Request.
(b) A Guarantor that is a Restricted Subsidiary (other than a Significant
Subsidiary) shall be deemed automatically and unconditionally released and
discharged from all of its obligations under its Guarantee, without any further
action on the part of the Trustee or any Holder, upon the release or discharge
of the Guarantee which resulted in the creation of such
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Restricted Subsidiary's Guarantee of the Notes, except a discharge or release
by, or as a result of, payment under such Guarantee.
ARTICLE XI.
MISCELLANEOUS
-------------
Section 11.1. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture or any Guarantee limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 11.2. Notices.
-------
Any notice or communication shall be given in writing and delivered in
person, sent by facsimile, delivered by commercial courier service or mailed by
first-class mail, postage prepaid, addressed as follows:
If to the Issuers or any Guarantor:
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attention: James A. Cardwell, Sr.
Fax Number: (915) 774-7373
Copy to:
Petro Holdings GP Corp.
717 Fifth Avenue
23rd Floor
New York, New York 10022
Attention: Michael S. Schein
Fax Number: (212) 521-5533
and
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, NW
Suite 400
Washington, D.C. 20036
Attention: Russell W. Parks, Jr., P.C.
Fax Number: (202) 887-4288
If to the Trustee:
State Street Bank and Trust Company
Two International Place
Fourth Floor
Boston, Massachusetts 02110
Attention: Patrick Thebado
Fax Number: (617) 664-5371
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Such notices or communications shall be effective when received and shall
be sufficiently given if so given within the time prescribed in this Indenture.
The Issuers, any Guarantor or the Trustee by written notice to the others
may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Noteholder shall be mailed to him
by first-class mail, postage prepaid, at his address shown on the register kept
by the Registrar. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given on the date so deposited in
the mail, whether or not the addressee receives it. Failure to mail a notice or
communication to a Noteholder or any defect in it shall not affect its
sufficiency with respect to other Noteholders. In case by reason of the
suspension of regular mail service, or by reason of any other cause, it shall be
impossible to mail any notice as required by this Indenture, then such method of
notification as shall be made with the approval of the Trustee shall constitute
a sufficient mailing of such notice.
Section 11.3. Communications by Holders with Other Holders.
---------------------------------------------
Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Issuers, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
Section 11.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Issuers or any Guarantor to the
Trustee to take any action under this Indenture, the Issuers shall furnish to
the Trustee at the request of the Trustee:
1. an Officers' Certificate (which shall include the statements set
forth in Section 11.5 below) in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with;
and
2. an Opinion of Counsel (which shall include the statements set
forth in Section 11.5 below) in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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Section 11.5. Statements Required in Certificate and Opinion.
----------------------------------------------
Each certificate and opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
1. a statement that the Person making such certificate or opinion
has read such covenant or condition;
2. a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
3. a statement that, in the opinion of such Person, it or he has
made such examination or investigation as is necessary to enable
it or him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
4. a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such Person
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of an Issuer or a Guarantor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters, upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of an Issuer or a Guarantor stating
that the information with respect to such factual matters is in the possession
of such Issuer or such Guarantor, unless such counsel knows or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements,
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opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Section 11.6. When Treasury Notes Disregarded.
-------------------------------
In determining whether the Holders of the required aggregate principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Issuers, any Guarantor or any other obligor on the Notes or by any
Affiliate of any of them shall be disregarded as though they were not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which the Trustee actually knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith shall not be disregarded if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to the Notes and that the pledgee is not an Issuer, a
Guarantor or any other obligor upon the Notes or any Affiliate of any of them.
Section 11.7. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or meetings of
Noteholders and any Registrar or Paying Agent may make reasonable rules for
their functions provided that no such rule shall conflict with the terms of this
Indenture or the TIA.
Section 11.8. Business Days; Legal Holidays.
-----------------------------
A "Business Day" is a day that is not a Legal Holiday. A "Legal Holiday"
is a Saturday, a Sunday, a federally-recognized holiday or a day on which
banking institutions are not required to be open in the State of New York or the
state in which the Corporate Trust Office is located. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
Section 11.9. Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATION LAW, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAW
RULES. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW
YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR
ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR THEMSELVES AND IN RESPECT
OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE ISSUERS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THAT THEY MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH
THEY MAY NOW OR
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HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY HOLDER OF THE NOTES TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE ISSUERS IN ANY OTHER JURISDICTION.
Section 11.10. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Issuers or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 11.11. No Recourse Against Others.
--------------------------
No recourse for the payment of the principal, Redemption Price or Purchase
Price of, and accrued interest on, any of the Notes, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Issuers or any Guarantor in this
Indenture or in any supplemental indenture, or in any Guarantee, or in any of
the Notes, or because of the creation of any Debt represented thereby, shall be
had against any stockholder, officer, director, partner, affiliate, beneficiary
or employee, as such, past, present or future, of the Issuers or any Guarantor
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee, partner, affiliate, beneficiary or director,
either directly or through the Issuers or any Guarantor, or any successor
corporation thereof, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture, the Guarantees, if any, and the Notes
are solely obligations of the Issuers and any Guarantors, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee, partner, affiliate, beneficiary or director of
the Issuers or any Guarantor, or any successor corporation or partnership
thereof, because of the creation of the Debt hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture,
the Guarantees, if any, or the Notes or implied therefrom, and that any and all
such personal liability of, and any and all claims against every stockholder,
officer, employee, partner, affiliate, beneficiary and director, are hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture, the Guarantees, if any, and the issuance of the
Notes. It is understood that this limitation on recourse is made expressly for
the benefit of any such shareholder, employee, officer, partner, affiliate,
beneficiary or director and may be enforced by any one or all of them.
-85-
<PAGE>
Section 11.12. Successors.
----------
All agreements of the Issuers and the Guarantors in this Indenture and the
Notes shall bind their respective successors. All agreements of the Trustee,
any additional trustee and any Paying Agents in this Indenture shall bind its
successor.
Section 11.13. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent one
and the same agreement.
Section 11.14. Table of Contents, Headings, etc.
---------------------------------
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 11.15. Separability.
------------
Each provision of this Indenture shall be considered separable and if for
any reason any provision which is not essential to the effectuation of the basic
purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
-86-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and the seal of each corporate Issuer to be hereunto affixed and
attested, all as of the date and year first written above.
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
---------------------------------------------
Name: Larry J.Zine
Title: Executive Vice President
ATTEST:
/s/ David A. Haug
-------------------------------------------------
Name: David A. Haug
Title: Assistant Secretary
PETRO FINANCIAL CORPORATION
By: /s/ Larry J.Zine
---------------------------------------------
Name: Larry J. Zine
Title: Vice President
ATTEST:
/s/ David A. Haug
-------------------------------------------------
Name: David A. Hug
Title: Secretary
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Patrick E. Thebado
---------------------------
Name: Patrick E. Thebado
Title: Assistant Vice President
ATTEST:
/s/ Alison Della Bella
-------------------------------
Name: Alison Della Bella
Title: Assistant Secretary
<PAGE>
Exhibit 4.7
[FORM OF NOTE]
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUERS OR
THEIR AGENT FOR REGISTRATION OF TRANSER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) or
(7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT, (C) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE ACT, (D) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE ACT, (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE ACT (IF AVIALABLE) OR (G) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE PURSUANT TO
CLAUSES (D), (F) AND (G) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE ACT.
CUSIP 715911-AA-1
A-1
<PAGE>
PETRO STOPPING CENTERS, L.P.
PETRO FINANCIAL CORPORATION
NO. $
10 1/2% SENIOR NOTE DUE 2007
Petro Stopping Centers, L.P., a Delaware limited partnership (the
"Company") and Petro Financial Corporation, a Delaware corporation ("PFC"
and, together with the Company, the "Issuers", which term includes any
successor entities), for value received promise to pay to _________ or
registered assigns the principal sum of _________________________________
DOLLARS on February 1, 2007.
Interest Payment Dates: February 1 and August 1, commencing August 1, 1997
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually
or by facsimile by their duly authorized officers.
PETRO STOPPING CENTERS, L.P.
By:
------------------------------
By: [SEAL]
------------------------------
PETRO FINANCIAL CORPORATION
By:
------------------------------
By: [SEAL]
------------------------------
Certificate of Authentication:
This is one of the 10 1/2% Senior Notes due 2007 referred to in the within-
mentioned Indenture.
Dated: January 30, 1997
STATE STREET BANK AND TRUST COMPANY
as Trustee
By:
---------------------------------
Authorized Signatory
A-2
<PAGE>
PETRO STOPPING CENTER, L.P.
PETRO FINANCIAL CORPORATION
10 1/2% SENIOR NOTE DUE 2007
1. INTEREST.
Petro Stopping Centers, L.P., a Delaware limited partnership and Petro
Financial Corporation, a Delaware corporation (the "Issuers"), promise to pay
interest on the principal amount of this Note semiannually on February 1 and
August 1 of each year (each an "Interest Payment Date"), commencing on August 1,
1997, at the rate of 10 1/2% per annum. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of the original issuance of the Notes. The Issuers
shall pay interest on overdue principal, Redemption Price or Purchase Price of,
and accrued interest on, the Notes to the extent lawful, at the rate equal to 1%
per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Issuers will pay interest on this Note provided for in Paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the January 15 and July 15 preceding the
Interest Payment Date (whether or not such day is a Business Day). The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Issuers will pay principal, Redemption Price or Purchase Price of, and accrued
interest on, the Notes in money of the United States that at the time of payment
is legal tender for payment of public and private debts; provided, however, that
the Issuers may pay principal, Redemption Price or Purchase Price of, and
accrued interest on, the Notes by check payable in such money. It may mail an
interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, State Street Bank and Trust Company, a Massachusetts trust
company (the "Trustee"), will act as Paying Agent and Registrar. The Issuers
may change any Paying Agent or Registrar without notice to the Holders of the
Notes. Neither the Issuers nor any of their Subsidiaries or Affiliates may act
as Paying Agent but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
the Issuers issued this Note under an Indenture dated as of January 30,
1997 (the "Indenture") by and among the Issuers and the Trustee. The terms of
this Note include those stated in the
A-3
<PAGE>
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) as in effect on the
date of the Indenture. This Note is subject to all such terms, and the Holder
of this Note is referred to the Indenture and said Trust Indenture Act for a
statement of them. All capitalized terms in this Note, unless otherwise
defined, have the meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Issuers limited to up to
$135,000,000 aggregate outstanding principal amount. The Indenture imposes
certain restrictions on, amount other things, the incurrence of additional Debt,
the incurrence of Liens and the issuance and sale of Capital Interests of
Restricted Subsidiaries, mergers and sale of assets, the payments of dividends
on, or the repurchase of, Capital Interests of the Issuers and their Restricted
subsidiaries, certain other restricted payments by the Issuers and their
Restricted Subsidiaries, certain transactions with, and investments in, its
Affiliates, certain Sale and Leaseback Transactions and a provision regarding
change-of-control transactions. The restrictions are subject to a number of
important qualifications and exceptions.
5. OPTIONAL REDEMPTION.
The Issuers may redeem the Notes, in whole or in part, at any time on or
after February 1, 2002 at the redemption prices set forth in Section 3.7 of the
Indenture, together, in each case, with accrued and unpaid interest to the
redemption date.
In addition, the Issuers may redeem Notes out of the net proceeds of one or
more Public Equity Offerings at the redemption price, in the amount and under
the terms set forth in the Indenture.
6. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at least 30 days
but not more than 60 days prior to the redemption date to each Holder of Notes
to be redeemed at its registered address as it shall appear on the register of
the Notes maintained by the Registrar. On and after any Redemption Date,
interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Issuers shall fail to redeem any such Note.
7. OFFERS TO PURCHASE.
In Indenture requires that certain proceeds from Asset Sales be used,
subject to further limitations contained therein, to make an offer to purchase
certain amounts of Notes in accordance with the procedures set forth in the
Indenture. The Issuers are also required to make an offer to purchase Notes
upon
A-4
<PAGE>
occurrence of a Change of Control in accordance with procedures set forth in
the Indenture.
8. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement by and among the Issuers and
CIBC Wood Gundy Securities Corp. and Morgan Stanley & Co. Incorporated, as
initial purchasers of the Notes, the Issuers will be obligated to consummate an
exchange offer pursuant to which the Holder of this Note shall have the right to
exchange this Note for Notes of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having substantially identical
terms as the Notes. The Holders shall be entitled to receive certain additional
interest payments (which shall constitute interest for purposes of this Note and
the Indenture) in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to an in accordance with the terms of the
Registration Rights Agreement.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of $1,000
and integral multiples thereof. A Holder may register the transfer or exchange
of Notes in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Note selected for
redemption or register the transfer of or exchange any Note for a period of 15
days before a selection of Notes to be redeemed or repurchased or any Note after
it is called for redemption or for repurchase in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of it for
all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal, Redemption Price or Purchase Price
of, and accrued interest on, any Note remains unclaimed for two years, the
Trustee or Paying Agent will pay the money back to the Issuers at their
request. After that, Holders entitled to money must look to the Issuers for
payment as general creditors unless an "abandoned property" law designates
another person.
A-5
<PAGE>
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be modified,
amended or supplemented by the Issuers, the Guarantors, if any, and the Trustee
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding and any existing default or compliance with any
provision may be waived in a particular instance with the consent of the Holders
of a majority in principal amount of the Notes then outstanding. Without the
consent of Holders, the Issuers, the Guarantors, if any, and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not materially and adversely affect the rights of any
Holder.
13. SUCCESSOR ENTITY.
When a successor corporation or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation or entity will be released from those obligations.
14. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event of Default
(other than an Event of Default pursuant to Section 6.1(9) or (10) of the
Indenture with respect to the Issuers) occurs and is continuing, the Trustee by
notice to the Issuers, or the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding by written notice to the issuers
and the Trustee, may declare to be immediately due and payable the entire
principal amount of all the Notes then outstanding plus accrued but unpaid
interest to the date of acceleration and such amounts shall become immediately
due and payable; provided, however, that after such acceleration but before
judgment or decree based on such acceleration, the Holders of a majority in
aggregate principal amount of the outstanding Notes may rescind and annul such
acceleration and its consequences if all existing Events of Default, other than
the nonpayment of principal, Redemption Price or Purchase Price of, and accrued
interest on, the Notes that has become due solely because of the acceleration,
have been cured or waived. No such rescission shall affect any subsequent
Default or impair any right consequent thereto. In case an Event of Default
specified in Section 6.1(9) or (10) of the Indenture occurs, such principal,
Redemption Price, Purchase Price and accrued interest with respect to all of the
Notes, shall be due and payable immediately without any declaration or other act
on the part of the Trustee or the Holders of the Notes. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal, Redemption Price, Purchase Price or
A-6
<PAGE>
accrued interest) if it determines that withholding notice is in their
interest.
15. TRUSTEE DEALINGS WITH THE ISSUERS.
The Trustee under the Indenture, in its individual, corporate or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers, any Guarantor or their Affiliates, and may otherwise deal with the
Issuers, any Guarantor or their Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer, employee,
partner, affiliate, beneficiary or stockholder, as such, of the Issuers or any
Guarantor shall not have any liability for any obligations of the Issuers or any
Guarantor under the Notes or the Indenture or for any claim based on, in respect
or by reason of, such obligations or their creation. The Holder of this Note by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Note.
17. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire Debt on this
Note and for defeasance of certain covenants in the Indenture upon compliance by
the Issuers with certain conditions set forth in the Indenture.
18. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Note
Identification Procedures, the Issuers have cause CUSIP numbers to be printed on
the Notes and have directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders of the Notes. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers place thereon.
20. GOVERNING LAW.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
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<PAGE>
INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATION LAW, BUT OTHERWISE WITHOUT
REGARD TO CONFLICT OF LAW RULES. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE ISSUERS IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT THAT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY
JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OR ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE TRUSTEE OR ANY HOLDER OF THE NOTES TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE ISSUERS IN ANY OTHER JURISDICTION.
THE ISSUERS WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: PETRO
STOPPING CENTERS, L.P., 6080 Surety Drive, El Paso, Texas 79905, Attention:
Chief Financial Officer.
21. AUTHENTICATION
This Note shall not be valid until the Trustee or an authenticating agent
manually signs the Certificate of Authentication on the other side of this Note.
A-8
<PAGE>
EXHIBIT 4.8
_____________________________________________________________________________
NOTE REGISTRATION RIGHTS AGREEMENT
Dated as of January 30, 1997
by and among
PETRO STOPPING CENTERS, L.P.
PETRO FINANCIAL CORPORATION
and
CIBC WOOD GUNDY SECURITIES CORP.
MORGAN STANLEY & CO. INCORPORATED
as Initial Purchasers
_____________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions....................................................... 1
-----------
2. Exchange Offer.................................................... 4
--------------
3. Shelf Registration................................................ 8
------------------
(a) Initial Shelf Registration.................................. 8
--------------------------
(b) Subsequent Shelf Registrations.............................. 9
------------------------------
(c) Supplements and Amendments.................................. 9
--------------------------
4. Additional Interest............................................... 9
-------------------
5. Registration Procedures........................................... 11
-----------------------
6. Registration Expenses............................................. 20
---------------------
7. Indemnification................................................... 22
---------------
8. Rules 144 and 144A................................................ 24
------------------
9. Underwritten Registrations........................................ 25
--------------------------
10. Miscellaneous..................................................... 25
-------------
(a) Remedies.................................................... 25
--------
(b) Enforcement................................................. 25
-----------
(c) No Inconsistent Agreements.................................. 26
--------------------------
(d) Adjustments Affecting Registrable Notes..................... 26
---------------------------------------
(e) Amendments and Waivers...................................... 26
----------------------
(f) Notices..................................................... 26
-------
(g) Successors and Assigns...................................... 27
----------------------
(h) Counterparts................................................ 27
------------
(i) Headings.................................................... 27
--------
(j) Governing Law............................................... 27
-------------
(k) Severability................................................ 27
------------
(l) Entire Agreement............................................ 27
----------------
(m) Notes Held by the Company or Its Affiliates................. 28
-------------------------------------------
-i-
<PAGE>
NOTE REGISTRATION RIGHTS AGREEMENT, dated as of January 30, 1997 (the
"Agreement"), by and among PETRO STOPPING CENTERS, L.P., a Delaware limited
partnership (the "Company"), PETRO FINANCIAL CORPORATION, a Delaware corporation
and wholly owned subsidiary of the Company ("PFC", and together with the
Company, the "Registrants"), and CIBC WOOD GUNDY SECURITIES CORP. and MORGAN
STANLEY & CO. INCORPORATED, as Initial Purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Securities
Purchase Agreement, dated as of January 23, 1997, by and among Petro Holdings GP
Corp., Chartwell Investments, Inc., the Registrants and the Initial Purchasers
(the "Purchase Agreement") relating to the sale by the Registrants to the
Initial Purchasers of $135,000,000 aggregate principal amount of 10 1/2% Senior
Notes due 2007 of the Registrants (the "Notes"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Registrants have agreed to
provide the registration rights set forth in this Agreement for the benefit of
the Initial Purchasers. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
-------------------
Advice: See Section 5.
------
Affiliate: An "affiliate" as defined in Rule 405 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).
Applicable Period: See Section 2(b).
-----------------
Closing: See the Purchase Agreement.
-------
Company: See the introductory paragraph to this Agreement.
-------
Effectiveness Date: The 135th day after the Issue Date.
------------------
Effectiveness Period: See Section 3(a).
--------------------
Eligible Notes: See Section 4(a).
--------------
Event Date: See Section 4(b).
----------
<PAGE>
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
--------------
Exchange Offer: See Section 2(a).
--------------
Exchange Registration Statement: See Section 2(a).
-------------------------------
Filing Date: The 75th day after the Issue Date.
-----------
Holder: Any holder of a Registrable Note or Registrable Notes.
------
Indemnified Person: See Section 7(c).
------------------
Indemnifying Person: See Section 7(c).
-------------------
Indenture: The Indenture, dated as of January 30, 1997, by and among
---------
the Registrants and State Street Bank and Trust Company, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
------------------
Initial Shelf Registration: See Section 3(a).
--------------------------
Inspectors: See Section 5(o).
----------
Issue Date: The date on which the original Notes are sold to the
----------
Initial Purchasers pursuant to the Purchase Agreement.
Lien: See the Indenture.
----
NASD: See Section 5(t).
----
Notes: See the introductory paragraphs to this Agreement.
-----
Participant: See Section 7(a).
-----------
Participating Broker-Dealer: See Section 2(b).
---------------------------
Person: An individual, corporation, partnership, joint venture,
------
association, joint stock Registrants, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
PFC: See the introductory paragraph to this Agreement.
---
-2-
<PAGE>
Private Exchange: See Section 2(b).
----------------
Private Exchange Notes: See Section 2(b).
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
------------------
Agreement.
Records: See Section 5(o).
-------
Registrable Notes: The Notes upon original issuance of the Notes and
-----------------
at all times subsequent thereto and, if issued, the Private Exchange Notes,
until in the case of any such Notes or any such Private Exchange Notes, as the
case may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and such Notes or such
Private Exchange Notes, as the case may be, have been disposed of in accordance
with such effective Registration Statement, (ii) such Notes or such Private
Exchange Notes, as the case may be, are sold in compliance with Rule 144 or
(iii) such Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registrants: See the introductory paragraph to this Agreement.
-----------
Registration Default: See Section 4(a).
--------------------
Registration Statement: Any registration statement of the
----------------------
Registrants, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Restricted Person: (i) Any Affiliate of any of the Registrants, (ii)
-----------------
the Initial Purchasers or (iii) any Affiliate of the Initial Purchasers (other
than Affiliates of the Initial Purchasers that (x) are acquiring the Exchange
Notes in the ordinary course of business and do not have an arrangement with
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<PAGE>
any Person to distribute the Exchange Notes and (y) may trade such Exchange
Notes without restriction (other than delivery required by Participating Broker-
Dealers of the Prospectus included in the Exchange Registration Statement) under
the Securities Act).
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 promulgated 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.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
------------
Shelf Registration: See Section 3(b).
------------------
Subsequent Shelf Registration: See Section 3(b).
-----------------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Registrants are sold to an underwriter(s) for reoffering
to the public.
2. Exchange Offer
--------------
(a) The Registrants agree to use their best efforts to file with the
SEC as soon as practicable after the Closing, but
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<PAGE>
in no event later than the Filing Date, an offer to exchange (the "Exchange
Offer") any and all of the Notes for a like aggregate principal amount of debt
securities of the Registrants which are identical to the Notes (the "Exchange
Notes") (and which are entitled to the benefits of the Indenture or a trust
indenture which is substantially identical to the Indenture (other than such
changes to the Indenture or any such identical trust indenture as are necessary
to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act. The Exchange Offer will be registered under the Securities Act on an
appropriate form (the "Exchange Registration Statement") and will comply with
all applicable tender offer rules and regulations under the Exchange Act. The
Registrants agree to use their best efforts to (x) cause the Exchange
Registration Statement to become effective under the Securities Act on or before
the Effectiveness Date; (y) keep the Exchange Offer open for at least 30 days
(or longer if required by applicable law) after the date that notice of the
Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or
prior to the 45th day following the date on which the Exchange Registration
Statement is declared effective. Each Holder who participates in the Exchange
Offer will be required to represent that any Exchange Notes received by it will
be acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, and that such Holder is not an Affiliate of the Registrants or if it is
such an Affiliate, that it will comply with the registration and prospectus
delivery requirements of the Securities Act, to the extent applicable. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
------- --------
with respect to Registrable Notes that are Private Exchange Notes, and the
Registrants shall have no further obligation to register Registrable Notes
(other than Private Exchange Notes) pursuant to Section 3 of this Agreement.
(b) The Registrants shall include within the Prospectus contained in
the Exchange Registration Statement a section entitled "Plan of Distribution,"
acceptable to the Initial Purchasers, which shall contain a summary statement of
-------
the positions taken or policies made by the staff of the SEC with respect to the
potential underwriter status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 promulgated under the Exchange Act) of Exchange Notes
received by such broker-dealer in the Exchange Offer (a "Participating Broker-
Dealer"), whether such positions or policies have been publicly disseminated by
the staff of the SEC or such positions or policies, in the judgment of the
Initial Purchasers, represent the prevailing views of the staff of the SEC.
Such "Plan of
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<PAGE>
Distribution" section shall also allow the use of the Prospectus by all persons
subject to the prospectus delivery requirements of the Securities Act, including
all Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Notes.
The Registrants shall use their best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act, including Participating Broker-Dealers, for such period of time as such
persons must comply with such requirements in order to resell the Exchange
Notes, provided that such period shall not exceed 180 days (or such longer
--------
period if extended pursuant to the last paragraph of Section 5) after the date
of the consummation of the Exchange Offer (the "Applicable Period").
If, immediately prior to consummation of the Exchange Offer, the
Initial Purchasers hold any Notes acquired by them and having, or which are
reasonably likely to be determined to have, the status as an unsold allotment in
the initial distribution, the Registrants upon the request of the Initial
Purchasers shall, simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, issue and deliver to the Initial Purchasers, in exchange (the
"Private Exchange") for the Notes held by such Initial Purchasers, a like
principal amount of debt securities of the Registrants that are identical in all
material respects to the Exchange Notes (the "Private Exchange Notes") (and
which are issued pursuant to the same indenture as the Exchange Notes). The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and any Private Exchange Notes will accrue from
the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on the Notes,
from the Issue Date.
In connection with the Exchange Offer, the Registrants shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Exchange Offer shall remain open.
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<PAGE>
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Registrants shall:
(i) accept for exchange all Notes tendered and not validly withdrawn
pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, the Exchange Notes or the Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the Indenture,
which in either event will provide that the Exchange Notes will not be subject
to the transfer restrictions set forth in the Indenture and that the Exchange
Notes, the Private Exchange Notes and the Notes will vote and consent together
on all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes nor the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If (1) prior to the consummation of the Exchange Offer, the
Registrants or Holders of at least a majority in aggregate principal amount of
the Registrable Notes reasonably determine in good faith that (i) the Exchange
Notes would not, upon receipt, be tradable by such Holders which are not
affiliates (within the meaning of the Securities Act) of the Registrants without
restriction (other than delivery required by Participating Broker-Dealers of the
Prospectus included in the Exchange Registration Statement) under the Securities
Act and without restrictions under applicable state securities laws or (ii)
after conferring with counsel, the SEC is unlikely to permit the effectiveness
of the Exchange Registration Statement prior to the Effectiveness Date, (2)
subsequent to the consummation of the Private Exchange, any holder of the
Private Exchange Notes so requests, or (3) the Exchange Offer is commenced and
not consummated within 180 days of the date of this Agreement, then the
Registrants shall promptly deliver to any such Holders and the Trustee written
notice thereof (the "Shelf Notice") and shall file an Initial Shelf Registration
pursuant to Section 3. Following the delivery of a Shelf Notice to the Holders
of Registrable Notes (in the circumstances contemplated by clauses (1) and (3)
of the preceding sentence), the Registrants shall not have any further
obligation to conduct the Exchange Offer or the Private Exchange under this
Section 2; provided, however, that if (in the circumstances contemplated by
-------- -------
clauses (1)(ii) and (3) of the preceding sentence) the Registrants subsequently
consummate
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<PAGE>
the Exchange Offer, the Registrants shall be subject to the provisions of
Section 4(a) until such consummation and thereafter shall not have any further
obligation to file an Initial Shelf Registration or cause such Initial Shelf
Registration to be declared effective by the SEC.
(d) In the event that the Registrants reasonably determine in good
faith and after conferring with counsel that (i) the Exchange Notes would not,
upon consummation of any resale thereof by a Restricted Person to any Person
other than another Restricted Person, be tradeable by each Holder thereof
without restriction (other than delivery required by Participating Broker-
Dealers of the Prospectus included in the Exchange Registration Statement) under
the Securities Act and the Exchange Act and without restriction under applicable
state securities or Blue Sky laws, or (ii) the SEC is unlikely to permit the
Registration Statement covering the Exchange Offer to become effective prior to
the Effectiveness Date solely because such Registration Statement covers resales
of the Exchange Notes by Restricted Persons, then the Registrants shall promptly
deliver a Shelf Notice to the Restricted Persons who are Holders of Registrable
Notes, and the Registrants shall thereafter file an Initial Shelf Registration
pursuant to, and otherwise comply with, the provisions of Section 3; provided
--------
that, if a Shelf Notice is not then otherwise required to be delivered pursuant
to Section 2(c), such Initial Shelf Registration shall only cover resales of
Registrable Notes by Restricted Persons. Following the delivery of a Shelf
Notice in accordance with this Section 2(d) and compliance with the provisions
of Section 3, the Registrants shall not have any further obligation under this
Section 2 with respect to the filing of an offer to exchange the Registrable
Notes held by the Restricted Persons (including, without limitation, any
obligation to provide that a Registration Statement filed pursuant to Section
2(a) cover resales of Exchange Notes by Restricted Persons); provided that, the
--------
provisions of this Section 2 shall otherwise remain in full force and effect
with respect to Registrable Notes held by any Person other than a Restricted
Person.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c) or (d),
then:
(a) Initial Shelf Registration. The Registrants shall prepare and file
--------------------------
with the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Notes (the "Initial
Shelf Registration"). If the Registrants shall have not yet filed an Exchange
Registration Statement, the Registrants shall use their best efforts to file
with the SEC the Initial Shelf Registration on or prior to the Filing Date. In
any other instance, the Registrants shall use their best efforts to file with
the SEC the Initial Shelf Registration within 30 days of the delivery of the
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<PAGE>
Shelf Notice. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
such Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Registrants shall not
permit any securities other than the Registrable Notes to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below). The Registrants shall use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until three years from the Issue Date (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration covering all of the Registrable Notes has been declared
effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (prior to the sale of all of the
securities registered thereunder), the Registrants shall use their best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement pursuant to Rule 415 covering all
of the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Registrants shall use their best efforts to
cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective during the Effectiveness Period. As used herein the term
"Shelf Registration" means the Initial Shelf Registration and any Subsequent
Shelf Registration.
(c) Supplements and Amendments. The Registrants shall promptly
--------------------------
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
4. Additional Interest
-------------------
The Registrants and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Registrants fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain
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<PAGE>
the extent of such damages with precision. Accordingly, the Registrants agree to
pay additional interest on the Eligible Notes (as defined below) ("Additional
Interest") under the circumstances set forth below:
(i) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration has been declared effective on or prior to the
Effectiveness Date; and/or
(iii) if either (A) the Registrants have not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to 45 days after the date on which the Exchange
Registration Statement was declared effective (but not including any Notes
that have not been validly tendered in accordance with the terms of the
Exchange Offer) or (B) the Exchange Registration Statement ceases to be
effective at any time prior to the time that the Exchange Offer is
consummated or (C) if applicable, the Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
prior to the earlier of the date on which all Registrable Notes covered by
the Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration or the third anniversary of the
Issue Date;
(each such event referred to in clauses (i) through (iii) above is a
"Registration Default" and each Note referred to in clauses (i) through (iii)
above is an "Eligible Note"), the sole remedy available to holders of the
Eligible Notes will be the immediate accrual of Additional Interest as follows:
the per annum interest rate on the Eligible Notes will increase by 50 basis
points upon the occurrence of a Registration Default; and the per annum interest
rate will increase by an additional 25 basis points for each subsequent 90-day
period during which the Registration Default remains uncured, up to a maximum
additional interest rate of 200 basis points per annum, provided, however, that
-------- --------
(1) upon the filing of the Exchange Registration Statement or the Initial Shelf
Registration (in the case of (i) above), (2) upon the effectiveness of the
Exchange Registration Statement or a Shelf Registration (in the case of (ii)
above) or (3) upon the exchange of Exchange Notes for all Notes validly tendered
(in the case of (iii)(A) above), or upon the effectiveness of the Exchange
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) above), or upon the effectiveness of the Shelf Registration which had
ceased to remain effective (in the case of (iii)(C) above), Additional Interest
on the Eligible Notes as a result of such clause (i), (ii) or (iii) (or the
relevant subclause thereof), as the case may be, shall cease to accrue and the
interest rate on the
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<PAGE>
Eligible Notes will revert to the interest rate originally borne by the Eligible
Notes.
(b) The Registrants shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semi-annually on each February 1 and August 1 (to the
Holders of record on the January 15 and July 15 immediately preceding such
dates), commencing with the first such date occurring after any such Additional
Interest commences to accrue. The amount of Additional Interest with respect to
each Eligible Note will be determined by multiplying the applicable Additional
Interest rate by the principal amount of such Eligible Note, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the registration of any Registrable Notes or
Private Exchange Notes pursuant to Section 2 or 3 hereof, the Registrants shall
effect such registrations to permit the sale of such Registrable Notes or
Private Exchange Notes in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Registrants shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section
2 or 3, and to use their best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein,
provided that, if (1) such filing is pursuant to Section 3, or (2) a
--------
Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, before filing any Registration Statement or Prospectus
or any amendments or supplements thereto, the Registrants shall, if
requested, furnish to and afford the Holders of the Registrable Notes and
each such Participating Broker-Dealer known by the Issuers, as the case may
be, covered by such Registration Statement, their counsel and the managing
underwriter(s), if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (at least
five business days prior to such filing). The Registrants shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity to
review prior to the filing of such document, if the
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<PAGE>
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement, or such Participating Broker-
Dealer, as the case may be, their counsel, or the managing underwriter(s),
if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented
by any prospectus supplement required by applicable law, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and comply with the provisions of
the Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to them with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-
Dealer covered by any such Prospectus; the Registrants shall be deemed not
to have used their best efforts to keep a Registration Statement effective
during the Applicable Period if any Registrant voluntarily takes any action
that would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes not
being able to sell such Registrable Notes or such Exchange Notes during
that period, unless such action is required by applicable law or unless
such Registrant complies with this Agreement, including without limitation,
the provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, notify the selling Holders of Registrable Notes, or each
such Participating Broker-Dealer known by the Issuer, as the case may be,
their counsel and the managing underwriter(s), if any, promptly (but in any
event within two business days), and confirm such notice in writing, (i)
when a Prospectus or any prospectus supplement or post-effective amendment
thereto has been filed, and, with respect to a Registration Statement or
any post-effective amendment thereto, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment thereto including financial
statements and schedules, documents incorporated or deemed to be
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<PAGE>
incorporated by reference and exhibits), (ii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of any preliminary Prospectus
or the initiation of any proceedings for that purpose, (iii) if at any time
when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes the representations and
warranties of the Registrants contained in any agreement (including any
underwriting agreement) contemplated by Section 5(n) below cease to be true
and correct, (iv) of the receipt by the Registrants of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material
respect or that requires the making of any changes in, or amendments or
supplements to, such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (vi) any Registrant's reasonable determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Notes or the Exchange Notes to be sold by any Participating Broker-Dealer,
for sale in any jurisdiction, and, if any such order is issued, to use
their best efforts to obtain the withdrawal of any such order at the
earliest possible moment.
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<PAGE>
(e) If a Shelf Registration is filed pursuant to Section 3 and if
reasonably requested by the managing underwriter(s), if any, or the Holders
of a majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly incorporate
in a Prospectus supplement or post-effective amendment thereto such
information as the managing underwriter(s), if any, or such Holders
reasonably request to be included therein, (ii) make all required filings
of such Prospectus supplement or such post-effective amendment thereto as
soon as practicable after the Registrants have received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment thereto and (iii) supplement or make amendments to such
Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and
the managing underwriter(s), if any, without charge, one conformed copy of
the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their counsel,
and the managing underwriter or underwriters, if any, without charge, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary Prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the
Registrants hereby consent to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, and the
managing underwriter or underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes
covered by or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to such Prospectus and any amendment or supplement thereto.
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<PAGE>
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their best efforts to register or qualify, and
cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter
or underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters, if any, reasonably request in
writing, provided that where Exchange Notes held by Participating Broker-
--------
Dealers or Registrable Notes are offered other than through an underwritten
offering, the Registrants agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided that no Registrant shall be
--------
required to (A) qualify generally to do business in any jurisdiction where
it is not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names
as the managing underwriter or underwriters, if any, or Holders may
reasonably request and which are consistent with the terms of the indenture
under which the Registrable Notes are issued.
(j) Use their best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or
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sellers thereof or the managing underwriter or underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Registrants will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of
such approvals at such sellers' cost and expense.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) above, as promptly as reasonably practicable
prepare and (subject to Section 5(a) above) file with the SEC, at the
expense of the Registrants, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
Purchasers of the Registrable Notes being sold thereunder or to the
Purchasers of the Exchange Notes to whom such Prospectus will be delivered
by a Participating Broker-Dealer during the Applicable Period, any such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(l) Use their best efforts to cause the Registrable Notes covered by a
Registration Statement or the Exchange Notes sold by a Participating
Broker-Dealer during the Applicable Period, as the case may be, to be rated
with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
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Notes and take all such other actions as are reasonably requested by the
managing underwriter(s), if any, in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, and in such
connection, (i) make such representations and warranties to the managing
underwriter or underwriters on behalf of any underwriters, with respect to
the business of the Company and its subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Registrants and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
managing underwriter or underwriters covering the matters customarily
covered in opinions requested in underwritten offerings of debt securities
and such other matters as may be reasonably requested by underwriters;
(iii) obtain "cold comfort" letters and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Registrants or of any business
acquired by the Registrants for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to the managing underwriter or underwriters on behalf of any
underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities and such other matters as
reasonably requested by the managing underwriter or underwriters; and (iv)
if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set
forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer
who so requests, as
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the case may be, the managing underwriter or underwriters participating in
any such disposition of Registrable Notes, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company and its subsidiaries to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records which the Company
determines, in good faith, to be confidential and any Records which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid
or correct a material misstatement or material omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) the information in such Records has been made
generally available to the public other than through the Inspectors' breach
of any confidentiality agreement. Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer or underwriter will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it for
any purpose other than discharging due diligence responsibilities. In
addition, such information shall not be used as the basis for any market
transactions in the securities of the Registrants unless and until such is
made generally available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to
the Registrants and allow the Registrants to undertake appropriate action
to prevent disclosure of the Records deemed confidential at its expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer
Registration Statement or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders of the Registrable Notes, to
effect such changes to such indenture as may be required for such indenture
to be so qualified in accordance with the
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terms of the TIA; and execute, and use their best efforts to cause such
trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Notes are
sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Registrants, in a form customary for
underwritten offerings of debt securities similar to the Notes, addressed
to the Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer or the Private Exchange, as the case
may be, and which includes an opinion that (i) the Registrants have duly
authorized, executed and delivered the Exchange Notes and Private Exchange
Notes and the related indenture and (ii) each of the Exchange Notes or the
Private Exchange Notes, as the case may be, and related indenture
constitute a legal, valid and binding obligation of the Registrants,
enforceable against the Registrants in accordance with its respective terms
(with customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Registrants (or to
such other Person as directed by the Registrants) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the
Registrants shall mark, or cause to be marked, on such Registrable Notes
that such Registrable Notes are being cancelled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; and, in
no event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in
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connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(u) Use their best efforts to take all other steps necessary to effect
the registration of the Registrable Notes covered by a Registration
Statement contemplated hereby.
The Registrants may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Registrants such information regarding such seller or
Participating Broker-Dealer and the distribution of such Registrable Notes or
Exchange Notes to be sold by such Participating Broker-Dealer, as the case may
be, as the Registrants may, from time to time, reasonably request. The
Registrants may exclude from such registration the Registrable Notes of any
seller or Participating Broker-Dealer who unreasonably fails to furnish such
information within a reasonable time after receiving such request.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Registrants of the happening of any event of the kind described
in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k), or until it is advised in writing (the "Advice") by the Registrants that
the use of the applicable Prospectus may be resumed, and has received copies of
any amendments or supplements thereto. In the event the Registrants shall give
any such notice, the Applicable Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each seller of Exchange Notes to be sold by such
Participating Broker-Dealer, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Registrants shall be borne by the Registrants whether
or not the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without
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limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the Holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h), in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Notes or Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Registrants and fees and disbursements of
special counsel for the sellers of Registrable Notes (subject to the provisions
of Section 6(b)), (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Registrants desire such insurance, (viii) fees and expenses of
the Trustee, (ix) fees and expenses of all other Persons retained by the
Registrants, (x) internal expenses of the Registrants (including, without
limitation, all salaries and expenses of officers and employees of the
Registrants performing legal or accounting duties), (xi) the expense of any
annual audit, (xii) the fees and expenses incurred in connection with any
listing of the securities to be registered on any securities exchange if the
Registrants elect to list any such securities and (xiii) the expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Registrants shall reimburse the Holders of the Registrable Notes being
registered in such registration for the reasonable fees and disbursements, of
not more than one counsel (in addition to appropriate local counsel) chosen by
the Holders of a majority in aggregate principal amount of the Registrable Notes
to be included in such Registration Statement and other reasonable out-of-pocket
expenses of the Holders of Registrable Notes incurred in connection with the
registration of the Registrable Notes. The Registrants shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities.
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7. Indemnification
---------------
(a) Each of the Registrants, jointly and severally, agrees to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the officers and directors of each such person, and each person, if any, who
controls any such person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus (as
amended or supplemented if the Registrants shall have furnished any amendments
or supplements thereto) or any preliminary Prospectus, or caused by, arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Participant or
underwriter furnished to the Registrants in writing by such Participant or
underwriter expressly for use therein.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Registrants, their directors and
officers and each person who controls any such person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Registrants to each Participant, but
only with reference to information relating to such Participant furnished to the
Registrants in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
Prospectus. The liability of any Participant under this paragraph (b) shall in
no event exceed the proceeds received by such Participant from sales of
Registrable Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either
paragraph (a) or (b) of this Section 7, such person (the "Indemnified Person")
shall promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
the Indemnified Person, shall retain one counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any
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others the Indemnifying Person may reasonably designate in such proceeding and
shall pay the reasonable fees and expenses incurred by such counsel related to
such proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representations of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate law firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Participants and such control
persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes sold by all such Participants and
any such separate firm for the Registrants, their directors and officers and
such control persons of the Registrants shall be designated in writing by the
Registrants. The Indemnifying Person shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses incurred by counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in paragraphs (a) and (b) of this
Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs,
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in lieu of indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the Registrants on the one hand and the
Participants on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Registrants on the
one hand and the Participants on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Registrants or by the Participants and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--------
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
------------------
The Registrants covenant that they will file the reports required to
be filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Registrants are not required to file such reports, they will, upon the
request of any Holder of Registrable Notes, make publicly
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available other information of a like nature until no longer necessary to permit
sales pursuant to Rule 144 or Rule 144A. The Registrants further covenant that
so long as any Registrable Notes remain outstanding to make available to any
Holder of Registrable Notes in connection with any sale thereof, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Registrable Notes pursuant to (a) such Rule 144A, or (b) any similar
rule or regulation hereafter adopted by the SEC, unless at such time the
Registrable Notes are fully saleable under Rule 144 or any successor provision.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Registrants.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous
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(a) Remedies. In the event of a breach by the Registrants of any of
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their obligations under this Agreement, other than the occurrence of an event
which requires payment of Additional Interest, each Holder of Registrable Notes,
in addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchasers, in the Purchase Agreement
or granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Registrants agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by them of any of the provisions of this Agreement and hereby
further agree that, in the event of any action for specific performance in
respect of such breach, they shall waive the defense that a remedy at law would
be adequate.
(b) Enforcement. The Trustee shall be authorized to enforce the
-----------
provisions of this Agreement for the ratable benefit of the Holders.
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(c) No Inconsistent Agreements. The Registrants do not have, as of the
--------------------------
date hereof, and the Registrants shall not, after the date of this Agreement,
enter into any agreement with respect to any of their securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The Registrants
have not entered and will not enter into any agreement with respect to any of
their securities which will grant to any Person piggy-back rights with respect
to a Registration Statement.
(d) Adjustments Affecting Registrable Notes. The Registrants shall
---------------------------------------
not, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Registrants have obtained the written consent of
Holders of at least a majority of the then outstanding aggregate principal
amount of Registrable Notes. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Notes whose securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Notes may be given by Holders of at least a majority in aggregate
principal amount of the Registrable Notes being sold by such Holders pursuant to
such Registration Statement, provided that the provisions of this sentence may
--------
not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(f) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes, at the most current address
given by the Trustee to the Registrants; and
(ii) if to the Registrants, c/o Petro Stopping Centers, L.P., 6080
Surety Drive, El Paso, Texas 79905, Attention: Chief Financial Officer,
with a copy to Petro Holdings GP Corp., 717 Fifth Avenue, 23rd Floor, New
York, New York 10022, Attention: President, and to Akin, Gump, Strauss,
Hauer & Feld, L.L.P., 1333 New Hampshire Avenue, N.W., Suite 400,
Washington, D.C. 20036, Attention: Russell W. Parks, Jr., Esq.
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All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Notes.
(h) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
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reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final expression of
their agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
-27-
<PAGE>
(m) Notes Held by the Registrants or their Affiliates. Whenever the
-------------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Registrants or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be deemed outstanding for such purpose and shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
--------------------
Name: Larry J. Zine
Title: Exec VP
PETRO FINANCIAL CORPORATION
By: /s/ Larry J.Zine
--------------------
Name: Larry J. Zine
Title: VP
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Neil Wiesenberg
-------------------
Name: Neil Wiesenberg
Title: Managing Director
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William Reid
--------------------
Name: William Reid
Title: Managing Director
-29-
<PAGE>
EXHIBIT 4.9
================================================================================
AMENDED AND RESTATED
REVOLVING CREDIT
AND TERM LOAN AGREEMENT
dated as of January 30, 1997
among
PETRO STOPPING CENTERS, L.P.,
THE FIRST NATIONAL BANK OF BOSTON
AND THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 HERETO
-------- -
and
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS AND RULES OF INTERPRETATION..................................1
1.1. Definitions......................................................1
1.2. Rules of Interpretation..........................................27
2. THE REVOLVING CREDIT FACILITY............................................28
2.1. Commitment to Lend...............................................28
2.2. Commitment Fee...................................................28
2.3. Reduction of Total Commitment....................................28
2.4. The Revolving Credit Notes.......................................29
2.5. Interest on Revolving Credit Loans...............................29
2.6. Requests for Revolving Credit Loans..............................29
2.7. Conversion Options...............................................30
2.7.1. Conversion to Different Type of Revolving
Credit Loan............................................30
2.7.2. Continuation of Type of Revolving Credit Loan..........30
2.7.3. Eurodollar Rate Loans..................................31
2.8. Funds for Revolving Credit Loans.................................31
2.8.1. Funding Procedures.....................................31
2.8.2. Advances by Agent......................................31
3. REPAYMENT OF THE REVOLVING CREDIT LOANS..................................32
3.1. Maturity.........................................................32
3.2. Mandatory Repayments of Revolving Credit Loans...................32
3.3. Optional Repayments of Revolving Credit Loans....................32
4. THE TERM LOANS...........................................................33
4.1. Term Loan A......................................................33
4.1.1. Commitment to Lend.....................................33
4.1.2. The Term A Notes.......................................33
4.1.3. Scheduled Installment Payments of Principal of
Term Loan A............................................33
4.1.4. Interest on Term Loan A................................34
4.2. Term Loan B......................................................35
4.2.1. Commitment to Lend.....................................35
4.2.2. The Term B Notes.......................................35
4.2.3. Scheduled Installment Payments of Principal
of Term Loan B.........................................35
4.2.4. Interest on Term Loan B................................36
4.3. Optional Prepayment of the Term Loans............................37
4.4. Mandatory Prepayment of the Term Loans and Expansion
Loans............................................................37
4.4.1. Proceeds...............................................37
4.4.2. Excess Cash Flow Recapture.............................38
4.4.3. Application............................................39
4.4.4. Expiration of Additional Tender Period.................39
5. THE EXPANSION LOAN.......................................................39
5.1. Commitment to Lend...............................................39
5.1.1. Commitments............................................39
<PAGE>
-ii-
5.1.1.1. Initial Disbursement Period...............39
5.1.1.2. Subsequent Disbursement Period............40
5.1.2. Conditions to Advances.................................40
5.2. Commitment Fee...................................................41
5.3. Scheduled Installment Payments of Principal on the
Expansion Loan...................................................42
5.4. Reduction of Total Expansion Commitment..........................42
5.5. The Notes........................................................42
5.6. Interest on Expansion Loan.......................................43
5.6.1. Interest Rates.........................................43
5.6.2. Notification by Borrower...............................43
5.6.3. Amounts................................................43
5.7. Borrower's Requisition...........................................44
5.8. Funds for Advances...............................................44
5.8.1. Funding Procedures.....................................44
5.8.2. Advances by Agent......................................44
6. REPAYMENT OF THE EXPANSION LOAN..........................................45
6.1. Maturity.........................................................45
6.2. Mandatory Repayments of Loans....................................45
6.2.1. Availability Exceeded..................................45
6.2.2. Excess Cash Flow.......................................45
6.3. Optional Repayments of Loan......................................46
7. LETTERS OF CREDIT........................................................46
7.1. Letter of Credit Commitments.....................................46
7.1.1. Commitment to Issue Letters of Credit..................46
7.1.2. Letter of Credit Applications..........................46
7.1.3. Terms of Letters of Credit.............................47
7.1.4. Reimbursement Obligations of Banks.....................47
7.1.5. Participations of Banks................................47
7.2. Reimbursement Obligation of the Borrower.........................47
7.3. Letter of Credit Payments........................................48
7.4. Obligations Absolute.............................................49
7.5. Reliance by Issuer...............................................49
7.6. Letter of Credit Fee.............................................49
8. CERTAIN GENERAL PROVISIONS...............................................50
8.1. Fees Payable to Agent............................................50
8.1.1. Closing Fee............................................50
8.1.2. Agent's Fee............................................50
8.2. Payments to Agent................................................50
8.3. Taxes............................................................50
8.4. Computations.....................................................52
8.5. Inability to Determine Eurodollar Rate...........................52
8.6. Illegality.......................................................52
8.7. Additional Costs, etc............................................53
8.8. Capital Adequacy.................................................54
8.9. Certificate......................................................54
8.10. Indemnity........................................................54
<PAGE>
-iii-
8.11. Interest After Default..........................................55
8.11.1. Overdue Amounts......................................55
8.11.2. Amounts Not Overdue..................................55
8.12. Interest Limitation.............................................55
8.13. Replacement of Bank.............................................56
9. COLLATERAL SECURITY AND GUARANTIES.......................................57
9.1. Security of Borrower............................................57
9.2. Guaranties and Security of Subsidiaries.........................57
10. REPRESENTATIONS AND WARRANTIES...........................................57
10.1. Partnership and Corporate Authority.............................57
10.1.1. Existence; Good Standing.............................57
10.1.2. Authorization........................................57
10.1.3. Enforceability.......................................58
10.2. Governmental Approvals..........................................58
10.3. Title to Properties; Leases.....................................58
10.4. Financial Statements and Projections............................59
10.4.1. Financial Statements.................................59
10.4.2. Projections..........................................59
10.4.3. Solvency.............................................59
10.5. No Material Changes, etc........................................60
10.6. Franchises, Patents, Copyrights, etc............................60
10.7. Litigation......................................................60
10.8. No Materially Adverse Contracts, etc............................60
10.9. Compliance with Other Instruments, Laws, etc....................60
10.10. Tax Status......................................................61
10.11. No Event of Default.............................................61
10.12. Holding Company and Investment Company Acts.....................61
10.13. Absence of Financing Statements, etc............................61
10.14. Perfection of Security Interest.................................61
10.15. Certain Transactions............................................61
10.16. Employee Benefit Plans..........................................62
10.16.1. In General...........................................62
10.16.2. Terminability of Welfare Plans.......................62
10.16.3. Guaranteed Pension Plans.............................62
10.16.4. Multiemployer Plans..................................63
10.17. Regulations U and X.............................................63
10.18. Environmental Compliance........................................63
10.19. Subsidiaries, etc...............................................65
10.20. Reasonably Equivalent Value.....................................65
10.21. Disclosure......................................................65
10.22. Chief Executive Offices.........................................66
10.23. Fiscal Year.....................................................66
10.24. No Amendments to Certain Documents..............................66
10.25. Representations Under Recapitalization Documents................66
10.26. Insurance.......................................................66
10.27. Representations Regarding each Project..........................66
10.27.1. Condition of Property................................66
<PAGE>
-iv-
10.27.2. Relevant Contracts...................................66
11. AFFIRMATIVE COVENANTS OF THE BORROWER....................................67
11.1. Punctual Payment................................................67
11.2. Maintenance of Office...........................................67
11.3. Records and Accounts............................................67
11.4. Financial Statements, Certificates and Information..............67
11.5. Notices.........................................................69
11.5.1. Defaults.............................................69
11.5.2. Environmental Events.................................69
11.5.3. Notification of Claim against Collateral.............69
11.5.4. Notice of Litigation and Judgments...................69
11.6. Existence; Maintenance of Properties............................70
11.7. Insurance.......................................................70
11.8. Taxes...........................................................71
11.9. Inspection of Properties and Books, etc.........................71
11.9.1. General..............................................71
11.9.2. Commercial Finance Examinations......................71
11.9.3. Appraisals...........................................71
11.9.4........................................................71
Environmental Assessments.....................................71
11.10. Compliance with Laws, Contracts, Licenses, and Permits..........72
11.11. Employee Benefit Plans..........................................72
11.12. Use of Proceeds.................................................72
11.13. Further Assurances..............................................73
11.14. Additional Mortgaged Property...................................73
11.15. Interest Rate Protection Arrangements...........................73
11.16. Cost Overruns...................................................73
11.17. Contingency Reserve.............................................74
11.18. Deposit of Funds Advanced.......................................74
11.19. Advances to Contractor..........................................74
11.20. Construction Inspector..........................................74
11.21. Landlord Consents...............................................75
12. CERTAIN NEGATIVE COVENANTS OF THE BORROWER...............................75
12.1. Restrictions on Indebtedness....................................75
12.2. Restrictions on Liens...........................................78
12.3. Restrictions on Investments.....................................80
12.4. Distributions...................................................82
12.5. Merger, Consolidation and Disposition of Assets.................82
12.5.1. Mergers and Acquisitions.............................82
12.5.2. Disposition of Assets................................83
12.6. Sale and Leaseback..............................................85
12.7. Compliance with Environmental Laws..............................85
12.8. Employee Benefit Plans..........................................85
12.9. Transactions with Affiliates....................................86
12.10. No Changes to Old Notes and New Notes...........................86
12.11. Fiscal Year.....................................................86
12.12. No Negative Pledges.............................................86
<PAGE>
-v-
12.13. Upstream Limitations............................................86
12.14. Inconsistent Agreements.........................................86
12.15. Undeveloped Land................................................87
13. FINANCIAL COVENANTS OF THE BORROWER......................................87
13.1. Maximum Consolidated Leverage Ratio.............................87
13.2. Minimum Net Worth...............................................87
13.3. Consolidated Cash Flow Ratio....................................88
13.4. Consolidated EBITDA/Interest....................................88
13.5. Consolidated Capital Expenditures...............................89
13.6. Operating Income................................................89
13.7. Operating Leases................................................89
14. CLOSING CONDITIONS.......................................................90
14.1. Loan Documents, etc.............................................90
14.1.1. Loan Documents.......................................90
14.1.2. Recapitalization Documents...........................90
14.1.3. New Notes............................................90
14.2. Certified Copies of Charter Documents...........................90
14.3. Action..........................................................90
14.4. Incumbency Certificate..........................................90
14.5. Validity of Liens...............................................91
14.6. Perfection Certificates and UCC Search Results..................91
14.7. Survey and Taxes................................................91
14.8. Title Insurance.................................................91
14.9. Landlord Consents...............................................91
14.10. Certificates of Insurance.......................................91
14.11. Appraisals......................................................92
14.12. Hazardous Waste Assessments.....................................92
14.13. Solvency Opinion................................................92
14.14. Opinions of Counsel.............................................92
14.15. Payment of Fees.................................................92
14.16. Commercial Finance Examination..................................92
14.17. Tender and Consent Under Indenture..............................92
14.18. New Notes.......................................................93
14.19. Satisfaction of Conditions of Recapitalization
Documents.......................................................93
14.20. Completion of Recapitalization..................................93
14.21. No Material Adverse Change......................................93
14.22. Capitalization..................................................93
14.23. Transaction Costs...............................................93
14.24. Consents and Approvals..........................................93
14.25. Pro Forma Balance Sheet.........................................93
15. CONDITIONS TO ALL BORROWINGS.............................................93
15.1. Representations True; No Event of Default.......................94
15.2. No Legal Impediment.............................................94
15.3. Governmental Regulation.........................................94
15.4. Proceedings and Documents.......................................94
15.5. Conditions to Advances and Revolving Credit Loans for
Permitted Financed Acquisitions.................................94
<PAGE>
-vi-
15.5.1. Acquisition Documents................................94
15.5.2. Real Estate Matters..................................95
15.5.3. Use of Proceeds......................................95
15.6. Conditions to Advances and Revolving Credit Loans for
Construction....................................................95
15.6.1. Construction Documents...............................95
15.6.2. Subcontracts.........................................95
15.6.3. Other Contracts......................................96
15.6.4. Deliveries...........................................96
15.6.4.1. Plans and Specifications..................96
15.6.4.2. Mortgage and Title Insurance Policy.......96
15.6.4.3. Other Insurance...........................96
15.6.4.4. Evidence of Sufficiency of Funds..........96
15.6.4.5. Evidence of Access, Availability of
Utilities, Governmental Approvals.........96
15.6.4.6. Environmental Report......................97
15.6.4.7. Survey....................................97
15.6.5. Legal Opinions.......................................97
15.6.6. Lien Search..........................................97
15.6.7. Notices..............................................97
15.6.8. Appraisal............................................97
15.6.9. Performance; No Default..............................97
15.6.10. Proceedings and Documents............................97
15.6.11. No Damage............................................98
15.6.12. Certificate..........................................98
15.6.13. Approval by Construction Inspector...................98
15.6.14. Final Survey.........................................98
15.6.15. Certificate of The Borrower's Architect..............98
15.6.16. Payment of Costs.....................................98
16. EVENTS OF DEFAULT; ACCELERATION; ETC.....................................98
16.1. Events of Default and Acceleration..............................98
16.2. Termination of Commitments.....................................102
16.3. Remedies.......................................................102
16.4. Distribution of Collateral Proceeds............................103
17. SETOFF..................................................................103
18. THE AGENT...............................................................104
18.1. Authorization..................................................104
18.2. Employees and Agents...........................................105
18.3. No Liability...................................................105
18.4. No Representations.............................................105
18.5. Payments.......................................................105
18.5.1. Payments to Agent...................................105
18.5.2. Distribution by Agent...............................106
18.5.3. Delinquent Banks....................................106
18.6. Holders of Notes...............................................106
18.7. Indemnity......................................................106
18.8. Agent as Bank..................................................107
<PAGE>
-vii-
18.9. Resignation....................................................107
18.10. Notification of Defaults and Events of Default.................107
18.11. Duties in the Case of Enforcement..............................107
19. EXPENSES................................................................108
20. INDEMNIFICATION.........................................................109
21. SURVIVAL OF COVENANTS, ETC..............................................109
22. ASSIGNMENT AND PARTICIPATION............................................110
22.1. Conditions to Assignment by Banks..............................110
22.2. Certain Representations and Warranties;
Limitations; Covenants.........................................111
22.3. Register.......................................................112
22.4. New Notes......................................................112
22.5. Participations.................................................112
22.6. Disclosure.....................................................113
22.7. Assignee or Participant Affiliated with
the Borrower...................................................113
22.8. Miscellaneous Assignment Provisions............................113
22.9. Assignment by Borrower.........................................114
22.10. Syndication....................................................114
23. NOTICES, ETC............................................................114
24. GOVERNING LAW...........................................................115
25. HEADINGS................................................................115
26. COUNTERPARTS............................................................115
27. ENTIRE AGREEMENT, ETC...................................................116
28. WAIVER OF JURY TRIAL....................................................116
29. CONSENTS, AMENDMENTS, WAIVERS, ETC......................................116
30. SEVERABILITY............................................................117
31. NO RECOURSE AGAINST OTHERS..............................................117
32. CONFIDENTIALITY.........................................................117
33. TRANSITIONAL ARRANGEMENTS...............................................118
33.1. Original Credit Agreement Superseded...........................118
33.2. Return and Cancellation of Notes...............................118
33.3. Interest and Fees Under Superseded Agreement...................118
<PAGE>
-viii-
SCHEDULES
---------
Schedule 1 - Banks; Commitments; Commitment Percentages
Schedule 10.3 - Titles to Properties;Leases
Schedule 10.7 - Litigation
Schedule 10.15 - Certain Officer,Director and Employee Transactions
Schedule 10.16 ERISA Matters
Schedule 10.18 - Environmental Matters
Schedule 10.19 - Joint Ventures and Partnerships
Schedule 10.23 - Fiscal Year Ends
Schedule 10.26 - Insurance
Schedule 12.1 - Indebtedness
Schedule 12.2 - Liens
Schedule 12.3 - Investments
Schedule 12.9 - Transactions with Affiliates
EXHIBITS
--------
Exhibit A-1 - Form of Amended and Restated Revolving Credit Note
Exhibit A-2 - Form of Amended and Restated Term A Note
Exhibit A-3 - Form of Amended and Restated Term B Note
Exhibit A-4 - Form of Expansion Note
Exhibit B-1 - Form of Loan Request
Exhibit B-2 - Form of Advance Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Mortgage Amendment
Exhibit F - Form of Partnership Pledge Agreement
Exhibit G-1 - Form of Security Agreement (Borrower)
Exhibit G-2 - Form of Security Agreement (Subsidiaries)
Exhibit H - Form of Stock Pledge Agreement
Exhibit I - Form of Subordination Agreement
Exhibit J-1 - Form of Guaranty
Exhibit J-2 - Form of Limited Recourse Guaranty
Exhibit K - Form of Trademark Assignment
Exhibit L-1 - Mortgaged Property delivered prior to Closing Date
Exhibit L-2 - Mortgaged Property delivered after the Closing Date
Exhibit M - Assignment of Contracts
Exhibit N - Assignment of Insurance
Exhibit O - Borrower's Requisition
Exhibit P - Assignment of Architect's Contract
Exhibit Q - Assignment of Construction Contract
Exhibit R - Construction Inspectors Certificate
<PAGE>
AMENDED AND RESTATED
--------------------
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
This AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as
of January 30, 1997, by and among PETRO STOPPING CENTERS, L.P. (the "Borrower"),
a Delaware limited partnership having its principal place of business at 6080
Surety Drive, El Paso, Texas 79905, THE FIRST NATIONAL BANK OF BOSTON, a
national banking association, and the other lending institutions listed on
Schedule 1 and THE FIRST NATIONAL BANK OF BOSTON as agent for itself and such
- -------- -
other lending institutions.
WHEREAS, pursuant to the Revolving Credit and Term Loan Agreement dated as of
May 18, 1994 (as amended and in effect from time to time, the "Original Credit
Agreement"), by and among the Borrower, certain of the Banks (as hereinafter
defined) and the Agent (as hereinafter defined), the Banks party thereto made
loans and other extensions of credit to the Borrower to refinance existing
indebtedness of the Borrower and for working capital and partnership purposes
and for financing new site expansions; and
WHEREAS, the Borrower has requested, among other things, to amend and restate
the Original Credit Agreement and to provide additional financing to effect the
Recapitalization (as hereinafter defined) and to finance acquisitions and
development of new truck stop properties or Petro:Lube facilities and for
general corporate and working capital purposes, and the Banks are willing to
provide such additional financing on the term and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Banks and the Agent agree that on the
Closing Date the Original Credit Agreement is hereby amended and restated in its
entirety as set forth herein and shall remain in full force and effect only as
set forth herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
1.1. DEFINITIONS.
-----------
The following terms shall have the meanings set forth in this (S)1 or
elsewhere in the provisions of this Credit Agreement referred to below:
Additional Tax Distributions. Distributions to pay tax liabilities arising
----------------------------
from the application of Section 704(c) of the Code.
Additional Tender Period. The period from the Closing Date through 120 days
------------------------
following the Closing Date.
Adjustment Date. The first Business Day which is five (5) days after the
---------------
earlier to occur of (a) the Borrower delivers to the Agent or (b) the Borrower
is required to deliver to the Agent the Compliance Certificate required by
(S)11.4(c) hereof for the Borrower's fiscal quarter most recently ended.
Advance. See (S)5.1.
-------
<PAGE>
-2-
Advance Request. See (S)5.1.2.
---------------
Affiliate. Any Person that would be considered to be an affiliate of the
---------
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent's Head Office. The Agent's head office located at 100 Federal Street,
-------------------
Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent. The First National Bank of Boston acting as agent for the Banks.
-----
Agent's Special Counsel. Bingham, Dana & Gould LLP or such other counsel as
-----------------------
may be approved by the Agent.
Applicable Margin. For each period commencing on an Adjustment Date through
-----------------
the date immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Applicable Margin shall be the applicable margin set forth below
with respect to the Borrower's Leverage Ratio, as determined for the fiscal
quarter ended immediately preceding the applicable Rate Adjustment Period.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
BASE RATE EURODOLLAR BASE RATE EURODOLLAR LETTER OF
LEVERAGE RATIO A LOANS RATE A LOANS B LOANS RATE B LOANS CREDIT FEE
- --------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Greater than or equal to 5.25:1.00 1.50% 2.75% 2.25% 3.25% 2.75%
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Less than 5.25:1.00 but greater than or 1.25% 2.50% 2.00% 3.00% 2.50%
equal to 4.25:1.00
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Less than 4.25:1.00 1.00% 2.25% 2.00% 3.00% 2.25%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, (a) for Loans outstanding and the Letter of
Credit Fees payable during the period commencing on the Closing Date through the
date immediately preceding the First Adjustment Date to occur after March 31,
1997, the Applicable Margin shall be the highest Applicable Margin set forth
above, and (b) if the Borrower fails to deliver any Compliance Certificate when
required by (S)11.4(c) hereof then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure through the date immediately
following the date on which such Compliance Certificate is delivered, the
Applicable Margin shall be the highest Applicable Margin set forth above.
Architect's Contract. As to each applicable Project, the contract dated after
--------------------
the Closing Date between the Borrower and each of the Borrower's Architects.
Asset Swap. Any exchange of property or assets of the Borrower or any of its
----------
Subsidiaries for property or assets of an unaffiliated third party which consist
of property or assets, including without limitation Stopping Centers, New Profit
Centers and Petro:Lubes, owned or used by the Borrower or such Subsidiary in the
ordinary course of business.
<PAGE>
-3-
Assignment and Acceptance. See (S)22.1.
-------------------------
Assignment of Contracts. The collateral assignment of contracts, permits,
-----------------------
licenses and approvals executed and delivered by the Borrower to the Agent and
substantially in the form of Exhibit M hereto.
------- -
Assignment of Insurance. The collateral assignment of insurance policies
-----------------------
executed and delivered by the Borrower to the Agent and substantially in the
form of Exhibit N hereto.
------- -
Attributable Debt. With respect to any sale and leaseback transaction, as at
-----------------
the date of determination, the greater of (a) the fair value of the property
subject to such arrangement (as determined in good faith by the Board of
Directors) and (b) the present value (discounted at the rate of interest
implicit in such transaction) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such sale and
leaseback transaction (including any period for which such lease has been
extended).
Balance Sheet Date. September 27, 1996.
------------------
Banks. FNBB and the other lending institutions listed on Schedule 1 hereto
----- -------- -
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to (S)22.
Base Rate. The higher of (a) the annual rate of interest announced from time
---------
to time by FNBB at its head office in Boston, Massachusetts, as its "base rate"
and (b) one-half of one percent (1/2%) above the Federal Funds Effective Rate.
For the purposes of this definition, "Federal Funds Effective Rate" shall mean
for any day, the rate per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three funds brokers of recognized standing selected
by the Agent.
Base Rate A Loans. Revolving Credit Loans, all or any portion of the Term
-----------------
Loan A and all or any portion of any Advance bearing interest calculated by
reference to the Base Rate.
Base Rate B Loans. All or any portion of the Term Loan B bearing interest
-----------------
calculated by reference to the Base Rate.
Base Rate Loans. The Base Rate A Loans and Base Rate B Loans.
---------------
Borrower. As defined in the preamble hereto.
--------
Borrower's Architect. For each Project for which, in the Borrower's
--------------------
reasonable determination, an architect is required, an architect selected by the
Borrower.
<PAGE>
-4-
Borrower's Requisition. As defined in (S)5.6.
----------------------
Board of Directors. (a) With respect to the Borrower, for so long as it is
------------------
organized as a limited partnership, its Board of Directors or any duly
authorized committee thereof; (b) with respect to a corporation, the board of
directors of such corporation or any duly authorized committee thereof; and (c)
with respect to any other partnership or other entity, the board of directors or
similar body of such partnership or other entity or of the general partner or
general partners of such partnership or other entity, as the case may be, or any
duly authorized committee thereof.
Business Day. Any day on which banking institutions in Boston, Massachusetts,
------------
are open for the transaction of banking business and, in the case of Eurodollar
Rate Loans, also a day which is a Eurodollar Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
--------------
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill) and including any capital stock or other
equity interests in another Person; provided that Capital Assets shall not
--------
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by a Person or
--------------------
any of its Subsidiaries in connection with the purchase or lease by such Person
or any of its Subsidiaries of Capital Assets that would be required to be
capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles, including, without limitation, amounts
paid or indebtedness incurred in connection with the acquisition, development or
construction of Stopping Centers, Petro:Lubes or New Profit Centers to be
acquired or opened after the Closing Date; provided, that Capital Expenditures
--------
shall not include amounts paid or Indebtedness incurred by such Person in
connection with (a) the defense of trademarks, service marks or copyrights, (b)
franchise development expenditures to the extent that such expenditures are
reimbursed or recouped through royalties or otherwise within twelve (12) months
from the date paid or incurred, as the case may be or (c) any portion of an
Asset Swap which is a substantially equivalent exchange of property or assets
(other than cash) of the Borrower or any of its Subsidiaries for property or
assets (other than cash) of an unaffiliated third party.
Capital Interests. With respect to any Person, any and all shares, interests,
-----------------
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than debt securities convertible into an
equity interest), warrants or options to acquire an equity interest in such
Person.
Capitalized Leases. Leases under which any Person is the lessee or obligor,
------------------
the discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.
CERCLA. See (S)10.18.
------
<PAGE>
-5-
Change of Control. The occurrence of any of the following events:
-----------------
(a) the Borrower sells, conveys, transfers or leases (either in one
transaction or a series of related transactions) all or substantially all
of its assets to a Person other than a Wholly-Owned Subsidiary of the
Borrower (other than a sale, conveyance, or transfer by the Borrower solely
for the purpose of converting the Borrower into a corporation); or
(b) a "Change of Control" (as such term is defined in the New Notes
Indenture as in effect on the Closing Date and as the same may be amended
and in effect from time to time) occurs.
Closing Date. The first date on which the conditions set forth in (S)14 have
------------
been satisfied and any Revolving Credit Loans, the Term Loans or any Advances
are to be made or any Letter of Credit is to be issued hereunder, which date is
January 30, 1997.
Code. The Internal Revenue Code of 1986.
----
Collateral. All of the property, rights and interests of the Borrower and its
----------
Subsidiaries and certain of the Sponsors that are or are intended to be subject
to the security interests and mortgages created by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
---------- -------- -
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provisions hereof,
zero.
Commitment Percentage. With respect to each Bank, the percentage set forth on
---------------------
Schedule 1 hereto as such Bank's percentage of each of the aggregate Commitments
- -------- -
of all the Banks, and with respect to the Term Loan A, the Term Loan B and the
Expansion Loan, the percentage amount set forth on Schedule 1 of such Bank's
----------
commitment to make the Term Loan A, the Term Loan B and the Expansion Loan.
Common Interests. With respect to any Person, the Capital Interests in such
----------------
Person that do not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to Capital Interests of any other
class in such Person.
Completion Date. As to each Project, the last to occur of (a) the Borrower's
---------------
Architect's issuance of a final certificate for payment, (b) the Borrower's
final payment of amounts outstanding under each such Construction Contract and
(c) the issuance of a complete, unconditional certificate or certificates of
occupancy for use of the Improvements.
Compliance Certificate. See (S)11.4(c).
----------------------
<PAGE>
-6-
Consolidated or consolidated. With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Cash Flow. For any period, the sum of (a) the Consolidated
----------------------
EBITDA of the Borrower and its Subsidiaries for such period, minus (b)
-----
Consolidated Tax Distributions and Additional Tax Distributions made during such
period, and, to the extent applicable, income taxes paid by the Borrower and its
Subsidiaries during such period, minus (c) the aggregate amount of Consolidated
-----
Maintenance Capital Expenditures during such period (including Consolidated
Maintenance Capital Expenditures carried over and used for Improvement or New
Site Capital Expenditures in such period), minus (d) without duplication, the
-----
aggregate amount of all cash Distributions made in such period .
Consolidated Cash Interest Expense. For any period, Consolidated Total
-----------------------------------
Interest Expense, minus, (a) to the extent included in Consolidated Total
-----
Interest Expense for such period, the accretion of original issue discount in
respect of instruments of indebtedness and any other noncash interest expense,
minus (b) to the extent included in Consolidated Total Interest Expense for such
- -----
period any deferred financing costs associated with transactions permitted by
the terms of this Credit Agreement, including the closing fee referred to in
(S)8.1.
Consolidated EBITDA. For any period, the sum of (in each case without
-------------------
duplication) (a) the Consolidated Net Income of the Borrower and its
Subsidiaries for such period (to the extent applicable, before any income tax
expensed by the Borrower or its Subsidiaries to the extent deducted in
calculating Consolidated Net Income), plus (b) to the extent deducted in the
----
calculation of Consolidated Net Income, the aggregate amount of noncash earnings
attributable to minority interest in the Borrower's Subsidiaries (calculated in
accordance with generally accepted accounting principles) for such period, plus
----
(c) to the extent deducted in the calculation of Consolidated Net Income, the
Consolidated Total Interest Expense of the Borrower and its Subsidiaries for
such period, plus (d) to the extent deducted in the calculation of Consolidated
----
Net Income, consolidated depreciation and amortization charges made (and not
previously added in this definition) in calculating Consolidated Net Income of
the Borrower and its Subsidiaries for such period, plus (e) to the extent
----
deducted in the calculation of Consolidated Net Income, other consolidated non-
cash charges made (and not previously added in this definition) in calculating
Consolidated Net Income of the Borrower and its Subsidiaries for such period,
plus (f) the aggregate amount of transaction costs incurred in connection with
- ----
the Recapitalization and expensed in such period to the extent (i) such costs
were deducted in the calculation of Consolidated Net Income and (ii) the
aggregate amount of such costs were approved by the Agent.
Consolidated Excess Cash Flow. For any period, the amount by which
-----------------------------
Consolidated EBITDA of the Borrower and its Subsidiaries, exceeds the sum of (a)
Consolidated Cash Interest Expense of the Borrower and its Subsidiaries for such
period, plus (b) principal payments made on the Indebtedness of the Borrower and
----
its Subsidiaries in such period (excluding repayments of Revolving Credit Loans
not made as a result of a reduction in the Total Commitment and any repayments
of Advances
<PAGE>
-7-
made during the Disbursement Period and not made as a result of a reduction in
the Total Expansion Commitment), plus (c) Tax Distributions and Additional Tax
----
Distributions made in such period, and, to the extent applicable, cash income
taxes paid by the Borrower and its Subsidiaries during such period, plus (d)
----
Capital Expenditures permitted under this Credit Agreement made in such period
other than New Site Capital Expenditures to the extent financed with an Advance
or a Revolving Credit Loan, plus (e) voluntary prepayments on the Term Loans
----
made in such period (other than any prepayment required to be made pursuant to
(S)(S)4.4.1 and 4.4.2 hereof).
Consolidated Financial Obligations. For any period, the sum of (a) all
----------------------------------
scheduled payments of principal on Indebtedness of the Borrower and its
Subsidiaries, including payments in respect of Capital Leases, which came due
during such period, but excluding (i) scheduled payments of principal on the
Expansion Loan and (ii) any payments required to be made pursuant to (S)4.4.4
hereof, plus (b) Consolidated Cash Interest Expense for such period.
----
Consolidated Funded Indebtedness. At any time, the sum of (without
--------------------------------
duplication) (a) the aggregate amount of Indebtedness of the Borrower and its
Subsidiaries, on a consolidated basis, relating to the borrowing of money or the
obtaining of credit or in respect of Capitalized Leases (other than Indebtedness
as described in clause (l) of the definition of Indebtedness and Indebtedness
permitted by (S)12.1(b) hereof), plus (without duplication) (b) the aggregate
----
Maximum Drawing Amount of all Letters of Credit outstanding in excess of
$5,000,000 in the aggregate, plus (without duplication) (c) all Indebtedness to
----
third parties (other than Indebtedness described in (S)12.1(e)) guaranteed by
the Borrower or any of its Subsidiaries.
Consolidated Net Income (or Deficit). The consolidated net income (or
------------------------------------
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary,
unusual and nonrecurring noncash items of income or expense and all
extraordinary, unusual and nonrecurring cash items of expense associated with
the repurchase of Indebtedness after the Closing Date.
Consolidated Net Worth. As of any date, the aggregate of capital, surplus and
----------------------
retained earnings of the Borrower and its Subsidiaries as would be shown on a
consolidated balance sheet of the Borrower and its Subsidiaries prepared as of
such date in accordance with generally accepted accounting principles, plus,
----
without duplication, the aggregate Capital Interests of the Borrower, less all
----
amounts, if any, attributable to Redeemable Capital Interests in such Person.
Consolidated Operating Income. For any period, the Consolidated EBITDA for
-----------------------------
such period less Consolidated Cash Interest Expense for such period.
----
Consolidated Total Interest Expense. For any period, the aggregate amount of
-----------------------------------
interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an
<PAGE>
-8-
item of expense or capitalized, including payments consisting of interest in
respect of Capitalized Leases and including commitment fees, agency fees,
facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
Construction Budget. As to each Project, the budget for total estimated
-------------------
Property Costs for each site, submitted by the Borrower to the Agent, which
includes: (a) a line item cost breakdown for construction of the Improvements
(the "Direct Cost Breakdown"); (b) a line item cost breakdown for Indirect Costs
(the "Indirect Cost Breakdown"); and (c) a schedule of the sources of funds to
pay such Property Costs (the "Source of Funds Schedule").
Construction Contract. As to each Project, the contract between the Borrower
---------------------
and the Contractor party thereto, which contract provides for the construction
of the Improvements on the Real Estate.
Construction Drawdown Date. The Drawdown Date for any Advance or Revolving
--------------------------
Credit Loan, as the case may be, for which the proceeds therefrom will not be
used to finance a Permitted Financed Acquisition.
Construction Inspector. At the Agent's option, either an officer or employee
----------------------
of the Agent or consulting architects, engineers or inspectors appointed by the
Agent.
Construction Schedule. For each Project, the schedule of the estimated dates
---------------------
of commencement and completion of the Improvements, submitted by the Borrower to
the Agent.
Contingency Reserve. As to any Project, the amount(s) allocated as
-------------------
contingency reserve(s) in the Construction Budget for such Project.
Contractor. As to any Project, the contractor selected by the Borrower.
----------
Conversion Request. A notice given by the Borrower to the Agent of the
------------------
Borrower's election to convert or continue a Loan in accordance with (S)2.7.
Credit Agreement. This Amended and Restated Revolving Credit and Term Loan
----------------
Agreement, including the Schedules and Exhibits hereto.
Default. See (S)16.1.
-------
Disbursement Period. The Initial Disbursement Period and the Subsequent
-------------------
Disbursement Period.
Disbursement Schedule. For each Project, the schedule of the amounts of
---------------------
Advances and/or Revolving Credit Loans anticipated to be requested by the
Borrower each month during the term of construction of the Improvements
(including an itemization of direct costs and Indirect Costs to be included in
each such requisition).
Distribution. The payment by any Person of any distributions or other
------------
payments to its partners as such or, as the case may be, its shareholders as
such; the declaration or
<PAGE>
-9-
payment of any dividend on or in respect of any partnership interest in or
shares of any class of capital stock of any Person, other than dividends or
other distributions payable solely in partnership interests or in shares of the
same or a junior class of stock or Capital Interests of such Person; or the
purchase or other retirement of any partnership interest in, or shares of any
class of capital stock of, any Person, directly or indirectly through a
Subsidiary or otherwise; the return of capital by any Person to its shareholders
or partners as such; or any other distribution on or in respect of any
partnership interest or shares of any class of capital stock or Capital
Interests of any Person.
Dollars or $. Dollars in lawful currency of the United States of America.
------- -
Domestic Lending Office. Initially, the office of each Bank designated as
-----------------------
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
-------- -
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Revolving Credit Loan, Term Loan or
-------------
Advance is made or is to be made, and the date on which any Revolving Credit
Loan is converted or continued in accordance with (S)2.7, all or any portion of
any Term Loan is converted or continued in accordance with (S)4.1.4(b) or
(S)4.2.4(b), or all or any portion of any Advance is converted or continued in
accordance with 5.7.2, as the case may be.
Eligible Assignee. Any of (a) a commercial bank or finance company organized
-----------------
under the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and
loan association or savings bank organized under the laws of the United States,
or any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
--------
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; (e) any other bank, insurance company, commercial
finance company or other financial institution or prime rate fund approved by
the Agent, such approval not to be unreasonably withheld; and (f) after the
occurrence and during the continuation of a Default or Event of Default, any
other Person approved by the Agent, which approval shall not be unreasonably
withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See (S)10.18(a).
------------------
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer with the
---------------
Borrower under (S)414 of the Code.
<PAGE>
-10-
ERISA Reportable Event. A reportable event with respect to a Guaranteed
----------------------
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any date with respect to a Eurodollar Rate
-------------------------
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
-----------------------
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated as
-------------------------
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
-------- -
that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
---------------
Loan, the rate of interest equal to (a) the arithmetic average of the rates per
annum for the Reference Bank (rounded upwards to the nearest 1/16 of one
percent) of the rate at which such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations of such Eurodollar Lending Office
are customarily conducted, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Rate Loan of the Reference Bank to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate, if applicable.
Eurodollar Rate A Loans. Revolving Credit Loans, all or any portion of the
-----------------------
Term Loan A and all or any portion of any Advance bearing interest calculated by
reference to the Eurodollar Rate.
Eurodollar Rate B Loans. All or any portion of the Term Loan B bearing
-----------------------
interest calculated by reference to the Eurodollar Rate.
Eurodollar Rate Loans. The Eurodollar Rate A Loans and the Eurodollar Rate B
---------------------
Loans.
Event of Default. See (S)16.1.
----------------
Excess Amount. See (S)13.1.
-------------
<PAGE>
-11-
Expansion Commitment. With respect to each Bank, the amount set forth on
--------------------
Schedule 1 hereto as the amount of such Bank's commitment to make Advances to
- ----------
the Borrower during the Disbursement Period, as the same may be reduced from
time to time; or, after the Disbursement Period or if such commitment is
terminated pursuant to the provisions hereof, zero.
Expansion Loan. Advances made or to be made by the Banks to the Borrower
--------------
during the Disbursement Period pursuant to (S)5.
Expansion Loan Maturity Date. December 31, 2001.
----------------------------
Expansion Note. See (S)5.4.
--------------
Expansion Note Record. A Record with respect to an Expansion Note.
---------------------
FNBB. The First National Bank of Boston, a national banking association, in
----
its individual capacity.
generally accepted accounting principles. (a) When used in (S)13, whether
----------------------------------------
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles adopted by the
Financial Accounting Standards Board and its predecessors, in effect for the
fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent
with such principles, the accounting practice of the Borrower reflected in its
financial statements for the year ended on the Balance Sheet Date, and (b) when
used in general, other than as provided above, means principles that are (i)
consistent with the principles adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and (ii)
consistently applied with past financial statements of the Borrower adopting the
same principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the meaning
-----------------------
of (S)3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate the benefits of which are guaranteed on termination in full or in part
by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.
Guaranty. Collectively, (a) the Amended and Restated Guaranty in
--------
substantially the form of Exhibit J-1 hereto, dated or to be dated on or prior
------- ---
to the Closing Date, made by each Subsidiary of the Borrower in favor of the
Banks and the Agent pursuant to which each Subsidiary of the Borrower jointly
and severally guaranties to the Banks and the Agent the payment and performance
of the Obligations and in form and substance satisfactory to the Banks and the
Agent and (b) the Limited Recourse Guaranty in substantially the form of Exhibit
-------
J-2 hereto, dated or to be dated on or prior to the Closing Date, made by
- ---
certain of the Sponsors in favor of the Banks and the Agent, pursuant to which
certain Sponsors guaranty to the Banks and the Agent the payment
<PAGE>
-12-
and performance of the Obligations and in form and substance satisfactory to the
Banks and the Agent.
Hazardous Substances. See (S)10.18(b).
--------------------
Improvement Capital Expenditures. Capital Expenditures made by a Person or
--------------------------------
any of its Subsidiaries in connection with making improvements on existing
facilities in accordance with the financial projections delivered pursuant to
(S)10.4.2 hereof and approved by the Agent.
Improvements. As to each Project, the buildings, fixtures, equipment and
------------
other improvements to be constructed on the Land in accordance with the Plans
and Specifications.
Indebtedness. With respect to any Person, whether recourse is to all or a
------------
portion of the assets of such Person or non-recourse, and whether or not
contingent, the following (without duplication): (a) all indebtedness of such
Person for borrowed money, whether current or funded, secured or unsecured,
recourse or non-recourse, (b) all obligations (other than interest, premium and
additional payments, if any) of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all indebtedness of such Person for the
deferred purchase price of property or services represented by a note or other
security (other than in respect of any trade payable), (d) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all indebtedness of
such Person secured by a purchase money mortgage or other lien to secure all or
part of the purchase price of property subject to such mortgage or lien, (f) all
Capitalized Lease obligations (other than the interest component of such
Capitalized Lease obligations), (g) any liability of such Person in respect of
banker's acceptances, letters of credit or similar facilities issued for the
account of such Person, (h) all other indebtedness secured by any mortgage,
pledge, security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed (limited, however, in the case of liabilities of
others, to the lesser of the amount of such liabilities or the value of such
property), (i) all guarantees, endorsements and other contingent obligations
whether direct or indirect in respect of indebtedness of others, including any
obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor, to purchase indebtedness, or to assure the owner of
indebtedness against loss, through an agreement to purchase goods, supplies, or
services for the purpose of enabling the debtor to make payment of the
indebtedness held by such owner or otherwise, (j) the obligations to reimburse
the issuer in respect of any letters of credit, (k) the maximum fixed redemption
or repurchase price of Redeemable Capital Interests in such Person at the time
of determination; (l) any interest swap obligations or currency hedge
obligations of such Person at the time of determination; (m) Attributable Debt
with respect to any sale and leaseback transaction to which such Person is a
party, and (n) all obligations of the types referred to in paragraphs (a)
through (m) of this definition of Indebtedness of another Person and all
dividends or other distributions of another Person, the payment of which, in
either case
<PAGE>
-13-
(i) such Person has guaranteed or (ii) is secured by (or the holder
of such Indebtedness or the recipient of such dividends or other distributions
has an existing right, whether contingent or otherwise, to be secured by) any
lien upon the property or other assets of such Person, event though such Person
has not assumed or become liable for the payment of such Indebtedness, dividends
or other distributions. For purposes of the foregoing, (i) the maximum fixed
repurchase price of any Redeemable Capital Interests that do not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Interests as if such Redeemable Capital Interests were
repurchased on any date of determination, provided, however, that, if such
-------- -------
Redeemable Capital Interests are not then permitted to be repurchased, the
repurchase price shall be the book value of such Redeemable Capital Interests;
and (ii) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the principal amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in accordance with generally accepted
accounting principles.
Indenture. The Indenture dated as of May 24, 1994 and as amended pursuant to
---------
the terms set forth in the Indenture Tender Offer, among the Borrower, Petro
Financial and First Trust National Association, as Trustee, in the form
delivered to the Agent prior to the Closing Date.
Indenture Tender Offer. The tender offer and solicitation of consents to the
----------------------
proposed amendment to the Indenture dated as of December 19, 1996 by Petro GP to
the holders of the Old Notes in the form delivered to the Agent prior to the
Closing Date.
Indirect Costs. For each Project, the title insurance premiums, survey
--------------
charges, engineering fees, architectural fees, real estate taxes during the
period of construction, commitment fees and interest payable to the Banks under
the Expansion Loan and Revolving Credit Loans, premiums for insurance, legal
fees and all other expenses which are, in accordance with generally accepted
accounting principles, Capital Expenditures relating to the Project.
Initial Disbursement Period. See (S)5.1.2.
---------------------------
Interest Payment Date. (a) As to any Base Rate Loan, the last day of the
---------------------
calendar quarter which includes the Drawdown Date thereof, and the last day of
each subsequent calendar quarter; and (b) as to any Eurodollar Rate Loan in
respect of which the Interest Period is (i) three (3) months or less, the last
day of such Interest Period and (ii) more than three (3) months, the date that
is three (3) months from the first day of such Interest Period and, in addition,
the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, all or any
---------------
relevant portion of the Term Loans or all or any relevant portion of any
Advance, (a) initially, the period commencing on the Drawdown Date of such Loan
and ending on the last day of one of the periods set forth below, as selected by
the Borrower in a Loan Request (i) for any Base Rate Loan, the last day of the
calendar quarter; and (ii) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months;
and (b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Loan and ending on the last day of
<PAGE>
-14-
one of the periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to Interest
--------
Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan would
otherwise end on a day that is not a Eurodollar Business Day, that Interest
Period shall be extended to the next succeeding Eurodollar Business Day unless
the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in (S)2.7,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan and the continuance of all Base Rate
Loans as Base Rate Loans on the last day of the then current Interest Period
with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Eurodollar Business Day
of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity Date (if comprising
a Revolving Credit Loan), the Term Loan A Maturity Date (if comprising Term
Loan A or a portion thereof), the Term Loan B Maturity Date (if comprising
Term Loan B or a portion thereof) or the Expansion Loan Maturity Date (if
comprising an Advance or a portion thereof) shall end on the Revolving Credit
Loan Maturity Date or the Term Loan A Maturity Date or the Term Loan B
Maturity Date or the Expansion Loan Maturity Date (as the case may be).
Investments. Any direct or indirect loan, advance (or other extension of
-----------
credit) or capital contribution to (by means of any transfer of cash or other
property or assets to another Person or any other payments for property or
services for the account or use of another Person), including without limitation
the following: (a) the purchase or acquisition of any Capital Interest or other
evidence of beneficial ownership in another Person; (b) the purchase,
acquisition or guarantee of the Indebtedness of another Person or the issuance
of a "keep well" with respect thereto; and (c) the purchase or acquisition of
the business or assets of another Person; provided, however, that (a) accounts
-------- -------
receivable purchased by the Borrower from its franchisees, licensees and third
party contractors in the ordinary course of business consistent with past
practices on commercially reasonable terms in accordance with normal trade
practices; (b) the acquisition of current assets in the ordinary course of
business; and (c) prepaid expenses
<PAGE>
-15-
and workers' compensation, utility, lease and similar deposits made in the
ordinary course of business shall not constitute Investments as defined herein.
In determining the aggregate amount of Investments outstanding at any particular
time: (i) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (iii)
there shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise; and
(iv) there shall not be deducted from the aggregate amount of Investments any
decrease in the value thereof.
IPA. The Interest Purchase Agreement dated as of October 18, 1996 and as
---
supplemented by a letter dated as of January 27, 1997 among Mobil, Petro GP,
Petro LP, the Borrower and the Selling Partners pursuant to which the Selling
Partners transfer all of their respective rights, title and interest in the
Borrower to Mobil, Petro GP and Petro LP pursuant to terms thereof, which
Interest Purchase Agreement is in the form delivered to the Agent prior to the
Closing Date.
Land. The Real Estate on which a Stopping Center or Petro:Lube has been built
----
or is to be built.
Letter of Credit. See (S)7.1.1.
----------------
Letter of Credit Application. See (S)7.1.1.
----------------------------
Letter of Credit Participation. See (S)7.1.4.
------------------------------
Leverage Ratio. The ratio of Consolidated Funded Indebtedness at the end of
--------------
any fiscal quarter to Consolidated EBITDA for the four fiscal quarters then
ended of the Borrower.
Lien. As to any Person, (a) any lien, encumbrance, mortgage, pledge, charge,
----
restriction, or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) any transfer of any such property or assets or
the income or profits therefrom for the purpose of securing the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors; (c) any acquisition, or agreement or option to acquire,
any property or assets upon conditional sale or other title retention or
purchase money security agreement, device or arrangement; (d) the existence for
a period of more than thirty (30) days after the same shall have been incurred
any Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever
under applicable law over its general creditors; or (e) any sale, assignment,
pledge or other transfer of any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
--------------
Applications, the Letters of Credit and the Security Documents.
<PAGE>
-16-
Loan Request. See (S)2.6.
------------
Loans. The Revolving Credit Loans, the Term Loans and the Expansion Loan.
-----
Maintenance Capital Expenditures. All Capital Expenditures other than those
--------------------------------
constituting New Site Capital Expenditures or Improvement Capital Expenditures.
Majority Banks. As of any date, the Banks holding at least fifty-one percent
--------------
(51%) of the sum of the outstanding principal amount of the Loans plus the
----
unused portion of the Commitments and the Expansion Commitments on such date,
plus the Maximum Drawing Amount of Letters of Credit on such date; and if no
- -----
such Loans and Letters of Credit are outstanding, the Banks whose aggregate
Commitments and Expansion Commitments constitutes at least fifty-one percent
(51%) of the Total Commitment plus the Total Expansion Commitment.
----
Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries
----------------------
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
Mobil. Mobil Long Haul Inc., a Delaware corporation.
-----
Mortgage Amendments. Collectively, each of the amendments to each of the
-------------------
Mortgages substantially in the form of Exhibit E hereto, entered into prior to
------- -
the Closing Date, which amendments shall be dated on or prior to the Closing
Date and shall be in form and substance satisfactory to the Agent.
Mortgaged Property. Any Real Estate which is subject to any Mortgage,
------------------
including any Real Estate acquired by the Borrower or a Subsidiary after the
Closing Date which shall become subject to a Mortgage upon acquisition.
Mortgages. Collectively, (a) the several mortgages and deeds of trust, dated
---------
or to be dated as of May 18, 1994, as amended, and as further amended by the
Mortgage Amendment pertaining to such Mortgage, from the Borrower and its
Subsidiaries to the Agent with respect to the fee and leasehold interests of the
Borrower and its Subsidiaries in the Real Estate referred to in Exhibit L-1
------- ---
hereto and in form and substance satisfactory to the Banks and the Agent, (b)
each of (i) the Mortgage dated as of August 11, 1994, as amended by an amendment
dated as of December 31, 1994 and as affected by a partial mortgage release
dated April 30, 1996, and as further amended by the Mortgage Amendment,
pertaining to such Mortgage on the fees interest of the Borrower in the Real
Estate located in Beaverdam, Ohio, (ii) the Mortgage dated as of September 6,
1994, as amended by the Mortgage Amendment, pertaining to such Mortgage on the
fee interest of the Borrower in the Real Estate located in Ocala, Florida; and
(iii) the Mortgage dated as of January 5, 1996, as amended by the Mortgage
Amendment, pertaining to such Mortgage on the fee interest of the Borrower in
the Real Estate located in Medford, Oregon; (c) the several mortgages and deeds
of trust, dated or to be dated on or prior to the Closing Date, from the
Borrower and its Subsidiaries in the Real Estate referred to in Exhibit L-2
-----------
hereto and in form and substance satisfactory to the Banks and the Agent, and
(d) such additional mortgages and deeds of trust as
<PAGE>
-17-
may be dated after the Closing Date from the Borrower and its Subsidiaries with
respect to fee and leasehold interests in Real Estate acquired after the Closing
Date.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37) of
------------------
ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
New Notes. The 10 1/2% Senior Notes due 2007 in the aggregate outstanding
---------
principal amount of not more than $135,000,000 issued by the Borrower and Petro
Financial pursuant to the New Notes Indenture and in the form delivered to the
Agent prior to the Closing Date.
New Notes Indenture. The Indenture dated on or prior to the Closing Date,
-------------------
among the Borrower, Petro Financial and the Trustee, in the form delivered to
the Agent on or prior to the Closing Date.
New Profit Centers. Any new profit center or operation intended to create new
------------------
or expanded revenues acquired, developed or constructed after the Closing Date
on any existing Stopping Center or Petro:Lube.
New Profit Center Project. The construction, acquisition or development by
-------------------------
the Borrower or any Subsidiary of any New Profit Center on any existing Stopping
Center or Petro:Lube.
New Profit Center Improvements. As to each New Profit Center Project, the
------------------------------
buildings, fixtures, equipment and other improvements to be constructed on the
existing Stopping Center or Petro:Lube, as the case may be, in accordance with
the plans and specifications applicable thereto.
New Profit Center Personal Property. As to each New Profit Center Project,
-----------------------------------
the materials, furnishings, fixtures, machinery, equipment and all items of
tangible and intangible personal property now or hereafter owned by the Borrower
or any of its Subsidiaries, wherever located, and either (a) to be incorporated
into the New Profit Center Improvements, (b) used in connection with the
construction of the New Profit Center Improvements or (c) to be used in
connection with the operation of the Land where such New Profit Center Project
is located or New Profit Center Improvements or both.
New Profit Center Property. As to each New Profit Center Project, the New
--------------------------
Profit Center Improvements and the New Profit Center Personal Property.
New Profit Center Property Costs. As to each New Profit Center Project, all
--------------------------------
New Site Capital Expenditures and, without duplication, all costs that will be
incurred by the Borrower or any of its Subsidiaries in connection with the
construction of the New Profit Center Improvements, and the carrying of the New
Profit Center Property through the date which is, as to each New Profit Center
Project, the last to occur of (a) the issuance by the architect (if any)
responsible for such New Profit Center Project of a final certificate for
payment, (b) the Borrower's or such Subsidiary's final payment of amounts
outstanding under each such construction contract and (c) the issuance of a
<PAGE>
-18-
complete, unconditional certificate or certificates of occupancy for use of the
New Profit Center Improvements.
New Site Capital Expenditures. Capital Expenditures made for the purpose of,
------------------------------
and in connection with, (a) the acquisition or construction by the Borrower or
any of its Subsidiaries of Stopping Centers and Petro:Lubes to be acquired,
constructed or opened after the Closing Date, (b) any Other Permitted
Acquisition and (c) any New Profit Center.
Non-Wholly Owned Subsidiary. Any Subsidiary of which less than 100%, but more
---------------------------
than 50% of, the outstanding Common Interests thereof are owned and controlled,
directly or indirectly, by the Borrower.
Notes. The Revolving Credit Notes, the Term Notes and the Expansion Notes.
-----
Obligations. All indebtedness, obligations and liabilities of any of the
-----------
Borrower and its Subsidiaries to any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Loans made or Reimbursement Obligations incurred or any of the Notes, any Letter
of Credit Application, Letter of Credit, any interest rate protection agreements
or other instruments at any time evidencing any thereof.
Offering Memorandum. The final Offering Memorandum with respect to the New
-------------------
Notes, dated January 23, 1997, in the form delivered to the Agent prior to the
Closing Date.
Old Notes. The 12.50% Senior Notes due 2002 in the aggregate amount of
---------
$100,000,000 issued by the Borrower and Petro Financial pursuant to the
Indenture and in the form delivered to the Agent prior to the Closing Date, and
of which less than $10,000,000 in principal amount shall be outstanding from and
after the Closing Date.
Omnibus Agreement. The Omnibus Agreement dated as of October 18, 1996, as
-----------------
amended by Amendment No. 1 thereto dated as of January 30, 1997, by and among
James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc., Petro, Inc.,
Mobil, Petro GP, Petro LP, Kirschner Investments and the Borrower, and in the
form delivered to the Agent on the Closing Date.
Original Credit Agreement. As defined in the preamble.
-------------------------
Other Permitted Acquisitions. See (S)12.5.1 hereof.
----------------------------
Other Taxes. Any present or future stamp or documentary taxes or any other
-----------
excise or property taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Credit Agreement or any other Loan Document.
<PAGE>
-19-
outstanding. With respect to the Loans, the aggregate unpaid principal
-----------
thereof as of any date of determination.
Partnership Pledge Agreement. The Pledge Agreement in substantially the form
----------------------------
of Exhibit F hereto, dated or to be dated as of the Closing Date, between
------- -
certain of the Sponsors and the Agent and in form and substance satisfactory to
the Banks and the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Amended and Restated Perfection Certificates as
-----------------------
defined in the Security Agreements.
Permitted Acquisition Closing Date. The first date on which the conditions
----------------------------------
set forth in the relevant Permitted Acquisition Purchase Agreement have been
satisfied and such Permitted Financed Acquisition has occurred.
Permitted Acquisition Purchase Agreement. Any of the purchase agreements
----------------------------------------
relating to a Permitted Financed Acquisition dated on or prior to December 31,
2001 between the Borrower or any of its Subsidiaries and the sellers of such
Stopping Centers.
Permitted Acquisitions. See (S)12.5.1 hereof.
----------------------
Permitted Financed Acquisition. The acquisition(s) by the Borrower or any of
------------------------------
its Subsidiaries of assets or the capital stock or other equity interests of any
other Person comprising, or to be renovated to become, one or more Stopping
Centers or Petro:Lubes pursuant to the terms of a Permitted Acquisition Purchase
Agreement and which acquisition is (a) financed in whole or in part by any
Advance or Revolving Credit Loan and (b) which is an acquisition permitted by
(S)12.5.1 hereof.
Permitted Liens. Liens, security interests, mortgages and other encumbrances
---------------
permitted by (S)12.2.
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Personal Property. As to each Project, the materials, furnishings, fixtures,
-----------------
machinery, equipment and all items of tangible and intangible personal property
now or hereafter owned by the Borrower, wherever located, and either (a) to be
incorporated into the Improvements, (b) used in connection with the construction
of the Improvements or (c) to be used in connection with the operation of the
Land or Improvements or both.
Petro Distributing. Petro Distributing, Inc., a Delaware corporation.
------------------
Petro Financial. Petro Financial Corporation, a Delaware corporation.
---------------
<PAGE>
-20-
Petro GP. Petro Holdings GP Corp., a Delaware corporation.
--------
Petro LP. Petro Holdings LP Corp., a Delaware corporation.
--------
Petro:Lube. A lube, oil and filter, tire and minor mechanical maintenance
----------
express facility for trucks and other heavy duty vehicles.
Petro:Lube Project. The construction or development by the Borrower or any
------------------
Subsidiary of any Petro:Lube, or the renovation of any facility to become a
Petro:Lube acquired by the Borrower or any Subsidiary in any Permitted Financed
Acquisition, on any Real Estate owned, leased or acquired by the Borrower or any
Subsidiary.
Petro:Lube Improvements. As to each Petro:Lube Project, the buildings,
-----------------------
fixtures, equipment and other improvements to be constructed on the Land in
accordance with the plans and specifications applicable thereto.
Petro:Lube Personal Property. As to each Petro:Lube Project, the materials,
----------------------------
furnishings, fixtures, machinery, equipment and all items of tangible and
intangible personal property now or hereafter owned by the Borrower or any
Subsidiary, wherever located, and either (a) to be incorporated into the
Petro:Lube Improvements, (b) used in connection with the construction of the
Petro:Lube Improvements or (c) to be used in connection with the operation of
the Land or Petro:Lube Improvements or both.
Petro:Lube Property. As to each Petro:Lube Project, the Land, the Petro:Lube
-------------------
Improvements and the Petro:Lube Personal Property.
Petro:Lube Property Costs. As to each Petro:Lube Project, all New Site
-------------------------
Capital Expenditures and, without duplication, all costs that will be incurred
by the Borrower or any of its Subsidiaries in connection with the acquisition of
the Land, the construction of the Petro:Lube Improvements, and the carrying of
the Petro:Lube Property through the date which is, as to each Petro:Lube
Project, the last to occur of (a) the issuance by the architect (if any)
responsible for such Petro:Lube Project of a final certificate for payment, (b)
the Borrower's or such Subsidiary's final payment of amounts outstanding under
each such construction contract and (c) the issuance of a complete,
unconditional certificate or certificates of occupancy for use of the Petro:Lube
Improvements.
Plans and Specifications. As to each Project, the plans and specifications
------------------------
for the Improvements prepared by the Borrower's Architect and more particularly
identified on a schedule to the Construction Contract pertaining thereto.
Preferred Interests. As applied to the Capital Interests in any Person, means
-------------------
Capital Interests in such Person of any class or classes (however designated)
that rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to Common Interests in such Person.
Prescribed Forms. Duly executed forms or statements, and in such number of
----------------
copies, which may, from time to time be prescribed by law and which, pursuant to
applicable provisions of (a) an income tax treaty between the United States and
the
<PAGE>
-21-
country of residence of the Bank providing the forms or statements, (b) the
Code, or (c) any applicable rule or regulation under the Code, permit the
Borrower or the Agent to make payments hereunder for the account of such Bank
free of deduction or withholding of income or similar taxes.
Pro Forma Basis. In connection with a Permitted Acquisition, other than
---------------
Permitted Acquisitions of Undeveloped Land, the Consolidated Funded Indebtedness
and Consolidated EBITDA for calculation of the Leverage Ratio for the fiscal
quarter in which such Permitted Acquisition occurred and each of the three
succeeding fiscal quarters with reference to the audited historical financial
results of the Person or assets so acquired and the Borrower and its
Subsidiaries for the applicable Test Period after giving effect on a pro forma
--- -----
basis to such Permitted Acquisition and assuming that such Permitted Acquisition
had been consummated at the beginning of such Test Period in the manner
described in (i), (ii) and (iii) below:
(i) all Indebtedness (whether under this Credit Agreement or otherwise)
and any other balance sheet adjustments incurred or made in connection with
the Permitted Acquisition shall be deemed to have been incurred or made on the
first day of the Test Period, and all Indebtedness of the Person acquired or
to be acquired in such Permitted Acquisition which was or will have been
repaid in connection with the consummation of the Permitted Acquisition shall
be deemed to have been repaid concurrently with the incurrence of the
Indebtedness incurred in connection with the Permitted Acquisition;
(ii) all Indebtedness assumed to have been incurred pursuant to the
preceding clause (i) shall be deemed to have borne interest at the sum of (a)
the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period of one
month in effect on the date of determination plus (b) the Applicable Margin
----
for Revolving Credit Loans then in effect (after giving effect to the
Permitted Acquisition on a Pro Forma Basis); and
---------
(iii) other reasonable cost savings, expenses and other income statement
or operating statement adjustments which are attributable to the change in
ownership and/or management resulting from such Permitted Acquisition as may
be approved by the Agent in writing (which approval shall not be unreasonably
withheld) shall be deemed to have been realized on the first day of the Test
Period.
Project. The construction by the Borrower or any Subsidiary of any Stopping
-------
Center or the renovation of any Stopping Center acquired by the Borrower or any
Subsidiary in any Permitted Financed Acquisition, on any Real Estate owned,
leased or acquired by the Borrower or any Subsidiary.
Property. As to each Project, the Land, Improvements and Personal Property.
--------
Property Costs. As to each Project, all New Site Capital Expenditures and,
--------------
without duplication, all costs that will be incurred by the Borrower in
connection with the acquisition of the Land, the construction of the
Improvements, and the carrying of
<PAGE>
-22-
the Property through the Completion Date, including without limitation all
Indirect Costs.
Rate Adjustment Period. See the definition of Applicable Margin.
----------------------
Real Estate. All real property at any time owned or leased (as lessee or
-----------
sublessee) by the Borrower or any of its Subsidiaries.
Recapitalization. The recapitalization of the Borrower on the
----------------
Recapitalization Closing Date by Petro GP, Petro LP, Mobil, James A. Cardwell,
Sr., James A. Cardwell, Jr. and certain other investors (collectively, the
"Sponsors") pursuant to the terms of the Recapitalization Documents and the
transactions contemplated thereby, including without limitation, the
reacquisition of the Old Notes and the Warrants after the Closing Date.
Recapitalization Closing Date. The first date on which the conditions set
-----------------------------
forth in the IPA have been satisfied and the Recapitalization has occurred.
Recapitalization Documents. Collectively, the IPA, the Omnibus Agreement, the
--------------------------
Restated Partnership Agreement and all agreements and documents required to be
entered into or delivered pursuant thereto or in connection with the
Recapitalization, each in the form delivered to the Agent on or before the
Recapitalization Closing Date.
Record. The grid attached to a Note, or the continuation of such grid, or any
------
other similar record, including computer records, maintained by any Bank with
respect to any Loan referred to in such Note.
Redeemable Capital Interest. In any Person, any equity security of such
---------------------------
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or otherwise (including the
passage of time or the happening of an event), is required to be redeemed, is
redeemable at the option of the holder thereof in whole or in part (including by
operation of a sinking fund), or is convertible or exchangeable for Indebtedness
of such Person at the option of the holder thereof, in whole or in part, at any
time prior to the Term Loan B Maturity Date; provided, however, that Preferred
-------- -------
Interests of the Borrower or any Subsidiary thereof that are issued with the
benefit of provisions requiring a change of control offer to be made for such
Preferred Interests in the event of a Change of Control of the Borrower shall
not be deemed to be Redeemable Capital Interests solely by virtue of such
provision.
Reference Bank. The First National Bank of Boston.
--------------
Reimbursement Obligation. The Borrower's obligation to reimburse the Agent
------------------------
and the Banks on account of any drawing under any Letter of Credit as provided
in (S)7.2.
Rental Obligations. All present and future obligations of the Borrower or any
------------------
of its Subsidiaries under any rental agreements or leases of real or personal
property, other than (a) obligations that can be terminated by the giving of
notice without liability to the Borrower or such Subsidiary in excess of the
liability for rent due as of the date on which such notice is given and for
periods through the effective date of termination
<PAGE>
-23-
specified in such notice, not to exceed ninety (90) days after the date of
notice, and under which no penalty or premium is paid as a result of any such
termination and (b) obligations in respect of Capitalized Leases.
Restated Partnership Agreement. The Third Amended and Restated Limited
------------------------------
Partnership Agreement of the Borrower dated as of January 30, 1997 by and among
Petro, Inc., Petro GP, James A. Cardwell, Sr., James A. Cardwell Jr., JAJCO II,
Inc., Petro LP, Mobil and Kirschner Investments, and in the form delivered to
the Agent on or prior to the Closing Date.
Revolver Availability. At any time during the Additional Tender Period, the
---------------------
Total Commitment less the Untendered Amount on such date, and thereafter, the
----
Total Commitment.
Revolving Credit Loan Commitment Percentage. With respect to each Bank, the
-------------------------------------------
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
----------
aggregate Commitments of all the Banks.
Revolving Credit Loan Maturity Date. December 31, 2001.
-----------------------------------
Revolving Credit Loans. Revolving credit loans made or to be made by the
----------------------
Banks to the Borrower pursuant to (S)2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
----------------------------
Note.
Revolving Credit Notes. See (S)2.4.
----------------------
Roadside. Roadside, Inc., a Delaware corporation.
--------
Security Agreements. The several Amended and Restated Security Agreements in
-------------------
substantially in the form of Exhibit G hereto, dated or to be dated on or prior
------- -
to the Closing Date, between the Borrower and its Subsidiaries and the Agent and
in form and substance satisfactory to the Banks and the Agent.
Security Documents. The Guaranty, the Security Agreements, the Assignment of
------------------
Contracts, the Assignment of Insurance, the Mortgages, the Trademark
Assignments, the Partnership Pledge Agreement, and the Stock Pledge Agreement.
Selling Partners. Collectively, Roadside and Sequoia.
----------------
Sequoia. Sequoia Ventures Inc., a Delaware corporation.
-------
Sponsors. As defined in the definition of Recapitalization.
--------
Stock Pledge Agreement. The Amended and Restated Stock Pledge Agreement in
----------------------
substantially the form of Exhibit H hereto, dated or to be dated on or prior to
------- -
the Closing Date, between the Borrower and the Agent and in form and substance
satisfactory to the Banks and the Agent.
<PAGE>
-24-
Stopping Centers. Multi-service truck stops, stopping center facilities or
----------------
other travel plaza facilities known as "Petro Stopping Centers" or "Petro: 2"
(or such other names as the Borrower may from time to time adopt) which
facilities provide services and amenities to commercial truck drivers and/or
trucking companies as well as other highway motorists and local residents and
which are operated by the Borrower or any of its Subsidiaries.
Subsequent Disbursement Period. See (S)5.1.2.
------------------------------
Subsidiary. Any corporation, association, trust, partnership or other
----------
business entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock or other voting equity interests.
Survey. In relation to each Mortgaged Property, an instrument survey of such
------
Mortgaged Property dated as of a date subsequent to January 1, 1992 for each
Mortgaged Property owned or leased by the Borrower or any of its Subsidiaries on
or prior to May 31, 1994 and such other later date as is acceptable to the Agent
for any Mortgaged Property owned or leased by the Borrower or any of its
Subsidiaries after the Closing Date, which shall show the location of all
buildings, structures, easements and utility lines on such Mortgaged Property,
shall be sufficient to remove the survey exception from the Title Policy, shall
show that all such buildings and structures are within the lot lines of such
Mortgaged Property, shall show any encroachments by others, and shall show
whether such Mortgaged Property is located in a flood hazard district as
established by the Federal Emergency Management Agency or any successor agency
or is located in any flood plain or flood hazard district established under
federal, state or local law.
Surveyor Certificate. In relation to each Mortgaged Property for which a
--------------------
Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated as of a recent date and containing such information relating
to such Mortgaged Property as the Agent or the Title Insurance Company may
require, such certificate to be reasonably satisfactory to the Agent in form and
substance.
Taking. Any condemnation for public use of, or damage by reason of, the
------
action of any governmental authority or agency, or any transfer by private sale
in lieu thereof, either temporarily or permanently.
Tax Distributions. Distributions to the partners of the Borrower and its
-----------------
Subsidiaries made for the purpose of providing funds to pay such partners' tax
liability in respect of the taxable income of the Borrower or the applicable
Subsidiary, excluding any Additional Tax Distribution. Aggregate Tax
Distributions shall not exceed, for any year, an amount equal to the Borrower's
or such Subsidiary's (as the case may be) taxable income for such year
multiplied by the maximum consolidated federal and state tax rate for
individuals or corporations (expressed as a decimal) then in effect.
Taxes. Any and all present or future taxes, levies, imposts, deductions,
-----
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each
<PAGE>
-25-
Bank and the Agent, taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction (or any political subdivision thereof) under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
lending office.
Term A Notes. See (S)4.1.2.
-------------
Term A Note Record. A record with respect to a Term A Note.
-------------------
Term B Notes. See (S)4.2.2.
-------------
Term B Note Record. A record with respect to a Term B Note.
-------------------
Term Loan A. The term loan made or to be made by the Banks to the Borrower
------------
on the Closing Date in the aggregate principal amount of $20,000,000 pursuant to
(S)4.1.
Term Loan A Maturity Date. December 31, 2001.
--------------------------
Term Loan B. The term loans made or to be made by the Banks to the Borrower
-----------
on the Closing Date in the aggregate principal amount of $30,000,000 pursuant to
(S)4.2.
Term Loan B Maturity Date. December 31, 2003.
--------------------------
Term Loans. Term Loan A and Term Loan B.
----------
Term Note Records. Term A Note Records and Term B Note Records.
-----------------
Term Notes. The Term A Notes and the Term B Notes.
----------
Test Period. The period of all fiscal quarters (and any portion of a fiscal
-----------
quarter) included in any covenant calculation and occurring prior to the date of
such Permitted Acquisition as set forth in the definition of "Pro Forma Basis".
Title Insurance Company. Stewart Title Guaranty Company or such other title
-----------------------
insurance company which is acceptable to the Agent.
Title Policy. In relation to each Mortgaged Property, an ALTA (or state
------------
regulated form in Texas and other states where ALTA policies are not available)
standard form mortgagee's policy of title insurance issued by the Title
Insurance Company in such amount as may be determined by the Agent, but not in
excess of the fair market value of such Mortgaged Property as determined by the
most recent appraisal of such Mortgaged Property, insuring the priority of the
Mortgage of such Mortgaged Property, and that the Borrower or one of its
Subsidiaries holds fee simple or leasehold title, as applicable, to such
Mortgaged Property, subject only to the encumbrances permitted by such Mortgage
and which shall not contain exceptions for mechanics liens, persons in occupancy
(other than tenants under recorded or unrecorded leases) or matters which would
be shown by a survey (except as may be permitted by such Mortgage), shall not
insure over any matter except to the extent that any such affirmative insurance
is acceptable to the Agent in its sole discretion, and shall contain such
endorsements and affirmative insurance as the Agent in its reasonable discretion
may require, including
<PAGE>
-26-
but not limited to (a) comprehensive endorsement, (b) variable rate of interest
endorsement, (c) revolving credit endorsement, (d) tie-in endorsement, (e) doing
business endorsement, (f) first loss endorsement and (g) gap endorsement (or in
Texas and any other state where ALTA policies are not available, similar
endorsements to the extent available).
Total Commitment. The sum of the Commitments of the Banks, as in effect from
----------------
time to time, as the same may be reduced from time to time pursuant to (S)2.3.
Total Expansion Commitment. The sum of the Expansion Commitments of the
--------------------------
Banks, as in effect from time to time, as the same may be reduced from time to
time pursuant to (S)5.4 and (S)12.1 hereof.
Trademark Assignments. The Trademark Collateral Assignment and Security
---------------------
Agreement in substantially the form of Exhibit K hereto, dated as of May 18,
------- -
1994 and as amended by the First Amendment thereto dated as of December 31, 1994
and the Second Amendment thereto dated on or prior to the Closing Date, made by
the Borrower in favor of the Agent and in form and substance satisfactory to the
Banks and the Agent.
Trustee. State Street Bank and Trust Company.
-------
Type. As to any Revolving Credit Loan, all or any portion of the Term Loans
----
or all or any portion of any Advance, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
Undeveloped Land. As of any date of determination, any real property owned by
----------------
the Borrower or any of its Subsidiaries which has not been, or is not in the
process of being, developed into a Stopping Center or Petro:Lube within one year
from the date of such acquisition.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
---------------
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the
-------------------------------
Borrower does not reimburse the Agent and the Banks on the date specified in,
and in accordance with, (S)7.2.
Untendered Amount. As of any date of determination, the aggregate amount of
-----------------
the Old Notes which have not been tendered on such date pursuant to the
Indenture Tender Offer, or which have been tendered but for which payment has
not been made by the Borrower.
Voting Stock. Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the
<PAGE>
-27-
corporation, association, trust or other business entity involved, whether or
not the right so to vote exists by reason of the happening of a contingency.
Warrants. The Exchangeable Debt Warrants issued on May 24, 1994 to the
--------
purchasers of the Old Notes, evidencing a right to exchange such Warrants for
not more than three percent (3%) of the outstanding shares of common stock of a
corporate successor to the Borrower or exchangeable for not more than $5,538,000
in the aggregate of additional principal amount of Old Notes upon the happening
of certain contingencies (including the Recapitalization) or upon May 24, 1998,
in the form delivered to the Agent prior to the closing date as defined in the
Original Credit Agreement.
Wholly-Owned Subsidiary. Any Subsidiary of which 100% of the outstanding
-----------------------
Capital Interests thereof are owned and controlled, directly or indirectly, by
the Borrower. For all purposes hereof, Petro Distributing and Petro Financial
are deemed to be Wholly-Owned Subsidiaries of the Borrower.
1.2. RULES OF INTERPRETATION.
-----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time
in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code
as in effect in the Commonwealth of Massachusetts, have the meanings assigned
to them therein, with the term "instrument" being that defined under Article 9
of the Uniform Commercial Code.
(h) Reference to a particular "(S)" refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
<PAGE>
-28-
(j) A reference to any date herein which is specifically identified as
a fiscal month, fiscal quarter or fiscal year end date shall mean the fiscal
month, fiscal quarter or fiscal year, as the case may be, ending nearest such
date.
2. THE REVOLVING CREDIT FACILITY.
-----------------------------
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in this
------------------
Credit Agreement, each of the Banks severally agrees to lend to the Borrower and
the Borrower may borrow, repay, and reborrow from time to time between the
Closing Date and the Revolving Credit Loan Maturity Date upon notice by the
Borrower to the Agent given in accordance with (S)2.6, such sums as are
requested by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Bank's
Commitment minus such Bank's Revolving Credit Loan Commitment Percentage of the
-----
sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations,
provided that the sum of the outstanding amount of the Revolving Credit Loans
- --------
(after giving effect to all amounts requested) plus the Maximum Drawing Amount
----
and all Unpaid Reimbursement Obligations shall not at any time exceed the lesser
of (a) Total Commitment and (b) the Revolver Availability. The Revolving Credit
Loans shall be made pro rata in accordance with each Bank's Revolving Credit
--- ----
Loan Commitment Percentage. Each request for a Revolving Credit Loan hereunder
shall constitute a representation and warranty by the Borrower that the
conditions set forth in (S)14 and (S)15, in the case of the initial Revolving
Credit Loans to be made on the Closing Date, and (S)15, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the accounts
--------------
of the Banks in accordance with their respective Revolving Credit Loan
Commitment Percentages a commitment fee calculated at the rate of one-half of
one percent (1/2%) on the average daily amount during each calendar quarter or
portion thereof from the Closing Date to the Revolving Credit Loan Maturity Date
by which the Total Commitment minus the sum of the Maximum Drawing Amount and
-----
all Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving
Credit Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the last day of each calendar quarter for such calendar
quarter commencing on the first such date following the Closing Date, with a
final payment on the Revolving Credit Maturity Date or any earlier date on which
the Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right at any
-----------------------------
time and from time to time upon three (3) Business Days prior written notice to
the Agent to reduce by $1,000,000 or an integral multiple of $1,000,000 in
excess thereof or terminate entirely the Total Commitment, whereupon the
Commitments of the Banks shall be reduced pro rata in accordance with their
--- ----
respective Revolving Credit Loan Commitment Percentages of the amount specified
in such notice or, as the case may be, terminated. Promptly after receiving any
notice of the Borrower delivered pursuant to this (S)2.3, the Agent will notify
the Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the respective
accounts of the Banks the full amount of any commitment fee then accrued on
<PAGE>
-29-
the amount of the reduction. No reduction or termination of the Commitments may
be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
--------------------------
evidenced by separate amended and restated promissory notes of the Borrower in
substantially the form of Exhibit A-1 hereto (each a "Revolving Credit Note"),
------- ---
dated as of the Closing Date and completed with appropriate insertions. One
Revolving Credit Note shall be payable to the order of each Bank in a principal
amount equal to such Bank's Commitment or, if less, the outstanding amount of
all Revolving Credit Loans made by such Bank, plus interest accrued thereon, as
set forth below. The Borrower irrevocably authorizes each Bank to make or cause
to be made, at or about the time of the Drawdown Date of any Revolving Credit
Loan or at the time of receipt of any payment of principal on such Bank's
Revolving Credit Note, an appropriate notation on such Bank's Revolving Credit
Note Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Revolving
Credit Loans set forth on such Bank's Revolving Credit Note Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to such
- ----- -----
Bank, but the failure to record, or any error in so recording, any such amount
on such Bank's Revolving Credit Note Record shall not limit or otherwise affect
the obligations of the Borrower hereunder or under any Revolving Credit Note to
make payments of principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided in
----------------------------------
(S)8.12, (a) each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest Period
with respect thereto at the rate per annum equal to the Base Rate plus the
----
Applicable Margin; and (b) each Eurodollar Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Applicable Margin.
----
The Borrower promises to pay interest on each Revolving Credit Loan in arrears
on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall give to the Agent
-----------------------------------
written notice in the form of Exhibit B-1 hereto (or telephonic notice confirmed
-----------
in a writing in the form of Exhibit B-1 hereto) of each Revolving Credit Loan
-----------
requested hereunder (a "Loan Request") no later than (a) 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan and (b) three (3)
Eurodollar Business Days prior to the proposed Drawdown Date of any Eurodollar
Rate Loan; provided, however, the Borrower shall not request any Eurodollar Rate
-------- -------
Loans until the date which is the earlier to occur of (i) thirty (30) days
following the Closing Date and (ii) the date on which the syndication of the
Loans hereunder has been completed, without the Agent's consent. Each such
notice shall specify (i) the principal amount of the Revolving Credit Loan
requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii)
the Interest Period for such Revolving Credit Loan, (iv) the Type of such
Revolving Credit Loan and (v) whether all or any portion of the proceeds of such
Revolving Credit Loan are being used to finance New Site Capital Expenditures.
Promptly upon receipt of any such notice, the Agent shall notify each of the
Banks thereof. Each Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the
<PAGE>
-30-
Revolving Credit Loan requested from the Banks on the proposed Drawdown Date.
Each Loan Request shall be in a minimum aggregate amount of $500,000 or an
integral multiple of $100,000 in excess thereof, subject to (S)2.7.3. In
addition, to the extent all or any portion of such Revolving Credit Loan is
being used to finance any Project, the Borrower shall comply with all of the
necessary provisions and conditions set forth in (S)(S)14 and 15 hereof as
applicable and, to the extent the proceeds of all or any portion of such
requested Revolving Credit Loan will be used to fund all or any Property Costs
associated with a Project, the Borrower shall also comply with the provisions of
(S)5.7 hereof.
2.7. CONVERSION OPTIONS.
------------------
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The
-----------------------------------------------------
Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (a) with
--------
respect to any such conversion of a Eurodollar Rate Loan to a Base Rate Loan,
the Borrower shall give the Agent at least one (1) Business Day's prior
written notice of such election; (b) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Agent at
least three (3) Eurodollar Business Days' prior written notice of such
election; (c) with respect to any such conversion of a Eurodollar Rate Loan to
a Base Rate Loan, such conversion shall only be made on the last day of the
Interest Period with respect to such Eurodollar Rate Loan and (d) no Base Rate
Loan may be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such conversion
is being made each Bank shall take such action as is necessary to transfer its
applicable Commitment Percentage of such Revolving Credit Loans to its
Domestic Lending Office or its Eurodollar Lending Office, as the case may be.
All or any part of outstanding Revolving Credit Loans of any Type may be
converted into a Revolving Credit Loan of another Type as provided herein,
provided that any partial conversion shall be in an aggregate principal amount
--------
of $500,000 or an integral multiple of $100,000 in excess thereof. Each
Conversion Request relating to the conversion of a Base Rate Loan to a
Eurodollar Rate Loan shall specify the Interest Period for such converted
Eurodollar Rated Loan and shall be irrevocable by the Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any Revolving
---------------------------------------------
Credit Loan of any Type may be continued as a Revolving Credit Loan of the
same Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in (S)2.7.1
that would have been applicable for a conversion into such Type; provided that
--------
no Eurodollar Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically converted
to a Base Rate Loan on the last day of the first Interest Period relating
thereto ending during the continuance of any Default or Event of Default of
which officers of the Agent active upon the Borrower's account have actual
knowledge. In the event that the Borrower fails to provide any such notice
with respect to the continuation of any Eurodollar Rate Loan as such, then
such Eurodollar Rate Loan shall be automatically converted to a Base Rate Loan
on the last day of the
<PAGE>
-31-
Interest Period relating thereto. The Agent shall notify the Banks promptly
when any such automatic conversion contemplated by this (S)2.7 is scheduled to
occur.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar
---------------------
Rate Loans shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be less than
$1,000,000 or an integral multiple of $100,000 in excess thereof. In addition,
no more than five (5) Eurodollar Rate Loans having different Interest Periods
shall be outstanding at any one time.
2.8. FUNDS FOR REVOLVING CREDIT LOANS.
--------------------------------
2.8.1. FUNDING PROCEDURES. Not later than 2:00 p.m. (Boston time) on
------------------
the proposed Drawdown Date of any Revolving Credit Loans, each of the Banks
will make available to the Agent, at the Agent's Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the amount
of the requested Revolving Credit Loans. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by (S)(S)14 and 15 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the Borrower the aggregate amount
of such Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the aforesaid
time and place on any Drawdown Date the amount of its Commitment Percentage of
the requested Revolving Credit Loans shall not relieve any other Bank from its
several obligation hereunder to make available to the Agent the amount of such
other Bank's Commitment Percentage of any requested Revolving Credit Loans.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
-----------------
contrary by any Bank prior to a Drawdown Date, assume that such Bank has made
available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Revolving Credit Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If any Bank makes available to the Agent such amount on a date after
such Drawdown Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (a) the average computed for the period referred to in
clause (c) below, of the weighted average interest rate per annum paid by the
Agent for federal funds acquired by the Agent during each day included in such
period, times (b) the amount of such Bank's Commitment Percentage of such
-----
Revolving Credit Loans, times (c) a fraction, the numerator of which is the
-----
number of days that elapse from and including such Drawdown Date to the date
on which the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans shall become immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to such Bank
with respect to any amounts owing under this paragraph shall be prima facie
----- -----
evidence of the amount due and owing to the Agent by such Bank. If the amount
of such Bank's Commitment Percentage of such Revolving Credit Loans is not
made available to
<PAGE>
-32-
the Agent by such Bank within three (3) Business Days following such Drawdown
Date, the Agent shall be entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
---------------------------------------
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit Loan
--------
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the sum of
----------------------------------------------
the outstanding amount of the Revolving Credit Loans, the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations exceeds the lesser of (a) the Total
Commitment and (b) the Revolver Availability, then the Borrower shall
immediately pay the amount of such excess to the Agent for the respective
accounts of the Banks for application: first, to any Unpaid Reimbursement
Obligations; second, to the Revolving Credit Loans; and third, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by (S)7.2(b)
and (c). Each payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to each Reimbursement Obligation or (as the case may be)
the respective unpaid principal amount of each Bank's Revolving Credit Note,
with adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall have
---------------------------------------------
the right, at its election, to repay the outstanding amount of the Revolving
Credit Loans, as a whole or in part, at any time without penalty or premium (but
subject to (S)8.11). The Borrower shall give the Agent, no later than 11:00
a.m., Boston time, on the date of any proposed prepayment written notice of any
proposed prepayment pursuant to this (S)3.3 of Base Rate Loans, and three (3)
Eurodollar Business Days' prior written notice of any proposed prepayment
pursuant to this (S)3.3 of Eurodollar Rate Loans, in each case specifying the
proposed date of prepayment of Revolving Credit Loans and the principal amount
to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall
be in a minimum aggregate amount of $250,000 or a whole multiple of $50,000 in
excess thereof and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans or both, at the Agent's option. Each partial prepayment
shall be allocated among the Banks, in proportion, as nearly as practicable, to
the respective unpaid principal amount of each Bank's Revolving Credit Note,
with adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
<PAGE>
-33-
4. THE TERM LOANS.
---------------
4.1. TERM LOAN A.
------------
4.1.1. COMMITMENT TO LEND. Subject to the terms and conditions set
------------------
forth in this Credit Agreement, each Bank agrees to lend to the Borrower on
the Closing Date Term Loan A in an amount equal to its Term Loan A Commitment
Percentage of the principal amount of $20,000,000.
4.1.2. THE TERM A NOTES. Term Loan A shall be evidenced by separate
----------------
amended and restated promissory notes of the Borrower in substantially the
form of Exhibit A-2 hereto (each a "Term A Note"), dated the Closing Date and
------- ---
completed with appropriate insertions. One Term A Note shall be payable to the
order of each Bank in a principal amount equal to such Bank's Term Loan A
Commitment Percentage of Term Loan A and representing the obligation of the
Borrower to pay to such Bank such principal amount or, if less, the
outstanding amount of such Bank's Term Loan A, plus interest accrued thereon,
as set forth below. The Borrower irrevocably authorizes each Bank to make or
cause to be made a notation on such Bank's Term A Note Record reflecting the
original principal amount of such Bank's Term Loan A and, at or about the time
of such Bank's receipt of any principal payment on such Bank's Term A Note, an
appropriate notation on such Bank's Term A Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term A Note
Record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Term A Note Record shall not affect the
obligations of the Borrower hereunder or under any Term A Note to make
payments of principal of and interest on any Term A Note when due.
4.1.3. SCHEDULED INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN A. The
----------------------------------------------------------
Borrower promises to pay to the Agent for the account of the Banks the
principal amount of Term Loan A in eighteen (18) consecutive quarterly
installments, such installments to be in the amounts set forth in the table
below and due and payable on the last day of each calendar quarter of each
calendar year, commencing on September 30, 1997, with a final payment on the
Term Loan A Maturity Date in an amount equal to the unpaid balance of Term
Loan A.
DATE PAYMENT AMOUNT
September 30, 1997 $ 750,000.00
December 31, 1997 $ 750,000.00
March 31, 1998 $ 625,000.00
June 30, 1998 $ 625,000.00
September 30, 1998 $ 625,000.00
December 31, 1998 $ 625,000.00
March 31, 1999 $1,000,000.00
June 30, 1999 $1,000,000.00
September 30, 1999 $1,000,000.00
December 31, 1999 $1,000,000.00
<PAGE>
-34-
March 31, 2000 $1,250,000.00
June 30, 2000 $1,250,000.00
September 30, 2000 $1,250,000.00
December 31, 2000 $1,250,000.00
March 31, 2001 $1,750,000.00
June 30, 2001 $1,750,000.00
September 30, 2001 $1,750,000.00
Term Loan A Maturity Date Remaining Unpaid
Balance of
Term Loan A
4.1.4. INTEREST ON TERM LOAN A.
-----------------------
(a) INTEREST RATES. Except as otherwise provided in (S)8.11, Term
--------------
Loan A shall bear interest during each Interest Period relating to all or any
portion of Term Loan A at the following rates:
(i) To the extent that all or any portion of Term Loan A
bears interest during such Interest Period based on the Base Rate, Term Loan A
or such portion shall bear interest during such Interest Period at the rate
per annum of the Base Rate plus the Applicable Margin.
----
(ii) To the extent that all or any portion of Term Loan A
bears interest during such Interest Period based on the Eurodollar Rate, Term
Loan A or such portion shall bear interest during such Interest Period at the
rate per annum of the Eurodollar Rate determined for such Interest Period plus
----
the Applicable Margin.
The Borrower promises to pay interest on Term Loan A or any portion
thereof outstanding during each Interest Period in arrears on each Interest
Payment Date applicable to such Interest Period.
(b) NOTIFICATION BY BORROWER. The Borrower shall notify the
------------------------
Agent, such notice to be irrevocable, at least three (3) Business Days prior
to the Drawdown Date of Term Loan A if all or any portion of the Term Loan is
to bear interest at the Eurodollar Rate; provided, however, the Borrower shall
-------- -------
not request any Eurodollar Rate Loans until the date which is the earlier to
occur of (i) thirty (30) days following the Closing Date and (ii) the date on
which the syndication of the Loans hereunder has been completed, without the
consent of the Agent. After Term Loan A has been made, the provisions of
(S)2.7 shall apply mutatis mutandis with respect to Term Loan A so that the
------- --------
Borrower may have the same interest rate options with respect to all or any
portion of Term Loan A as it would be entitled to with respect to the
Revolving Credit Loans (subject to the same limitations as apply to Revolving
Credit Loans under (S)2.7, except as to the minimum integral multiples of
partial conversions, which, in the case of the Term Loan A shall be in
integral multiples of $125,000); provided, however, the Borrower shall not be
-------- -------
permitted to have more than four (4) Eurodollar Rate A Loans which comprise
the Term Loan A outstanding at any time.
<PAGE>
-35-
(c) AMOUNTS, ETC. No Interest Period relating to Term Loan A or
------------
any portion thereof bearing interest based on the Eurodollar Rate shall extend
beyond the date on which a regularly scheduled installment payment of the
principal of Term Loan A is to be made unless a portion of Term Loan A at
least equal to such installment payment has an Interest Period ending on such
date or is a Base Rate Loan.
4.2. TERM LOAN B.
------------
4.2.1. COMMITMENT TO LEND. Subject to the terms and conditions set
------------------
forth in this Credit Agreement, each Bank agrees to lend to the Borrower on
the Closing Date Term Loan B in an amount equal to its Term Loan B Commitment
Percentage of the principal amount of $30,000,000.
4.2.2. THE TERM B NOTES. Term Loan B shall be evidenced by separate
----------------
amended and restated promissory notes of the Borrower in substantially the
form of Exhibit A-3 hereto (each a "Term B Note"), dated the Closing Date and
------- ---
completed with appropriate insertions. One Term B Note shall be payable to the
order of each Bank in a principal amount equal to such Bank's Term Loan B
Commitment Percentage of Term Loan B and representing the obligation of the
Borrower to pay to such Bank such principal amount or, if less, the
outstanding amount of such Bank's Term Loan B, plus interest accrued thereon,
as set forth below. The Borrower irrevocably authorizes each Bank to make or
cause to be made a notation on such Bank's Term B Note Record reflecting the
original principal amount of such Bank's Term Loan B and, at or about the time
of such Bank's receipt of any principal payment on such Bank's Term B Note, an
appropriate notation on such Bank's Term B Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term B Note
Record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Term B Note Record shall not affect the
obligations of the Borrower hereunder or under any Term B Note to make
payments of principal of and interest on any Term B Note when due.
4.2.3. SCHEDULED INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN B. The
----------------------------------------------------------
Borrower promises to pay to the Agent for the account of the Banks the
principal amount of Term Loan B in twenty-six (26) consecutive quarterly
installments, such installments to be in the amounts set forth in the table
below and due and payable on the last day of each calendar quarter of each
calendar year, commencing on September 30, 1997, with a final payment on the
Term Loan B Maturity Date in an amount equal to the unpaid balance of Term
Loan B.
Date Payment Amount
September 30, 1997 $ 250,000.00
December 31, 1997 $ 250,000.00
March 31, 1998 $ 125,000.00
June 30, 1998 $ 125,000.00
September 30, 1998 $ 125,000.00
<PAGE>
-36-
December 31, 1998 $ 125,000.00
March 31, 1999 $ 125,000.00
June 30, 1999 $ 125,000.00
September 30, 1999 $ 125,000.00
December 31, 1999 $ 125,000.00
March 31, 2000 $ 125,000.00
June 30, 2000 $ 125,000.00
September 30, 2000 $ 125,000.00
December 31, 2000 $ 125,000.00
March 31, 2001 $ 125,000.00
June 30, 2001 $ 125,000.00
September 30, 2001 $ 125,000.00
December 31, 2001 $ 125,000.00
March 31, 2002 $3,375,000.00
June 30, 2002 $3,375,000.00
September 30, 2002 $3,375,000.00
December 31, 2002 $3,375,000.00
March 31, 2003 $3,500,000.00
June 30, 2003 $3,500,000.00
September 30, 2003 $3,500,000.00
Term Loan B Maturity Date Remaining Unpaid
Balance of
Term Loan B
4.2.4. INTEREST ON TERM LOAN B.
-----------------------
(a) INTEREST RATES. Except as otherwise provided in (S)8.11, Term
--------------
Loan B shall bear interest during each Interest Period relating to all or any
portion of Term Loan B at the following rates:
(i) To the extent that all or any portion of Term Loan B
bears interest during such Interest Period based on the Base Rate, Term Loan B
or such portion shall bear interest during such Interest Period at the rate
per annum of the Base Rate plus the Applicable Margin.
----
(ii) To the extent that all or any portion of Term Loan B
bears interest during such Interest Period based on the Eurodollar Rate, Term
Loan B or such portion shall bear interest during such Interest Period at the
rate per annum of the Eurodollar Rate determined for such Interest Period plus
----
the Applicable Margin .
The Borrower promises to pay interest on Term Loan B or any portion
thereof outstanding during each Interest Period in arrears on each Interest
Payment Date applicable to such Interest Period.
(b) NOTIFICATION BY BORROWER. The Borrower shall notify the
------------------------
Agent, such notice to be irrevocable, at least three (3) Business Days prior
to the Drawdown Date of Term Loan B if all or any portion of the Term Loan B
is to bear interest based on the Eurodollar Rate; provided, however, the
-------- -------
Borrower shall not request any Eurodollar Rate Loans until the date which is
the earlier to
<PAGE>
-37-
occur of (i) thirty (30) days following the Closing Date and (ii)
the date on which the syndication of the Loans hereunder has been completed,
without the consent of the Agent. After Term Loan B has been made, the
provisions of (S)2.7 shall apply mutatis mutandis with respect to Term Loan B
------- --------
so that the Borrower may have the same interest rate options with respect to
all or any portion of Term Loan B as it would be entitled to with respect to
the Revolving Credit Loans (subject to the same limitations as apply to
Revolving Credit Loans under (S)2.7, except as to the minimum integral
multiples of partial conversions, which, in the case of the Term Loan B shall
be in integral multiples of $125,000); provided, however, the Borrower shall
-------- -------
not be permitted to have more than four (4) Eurodollar Rate B Loans
outstanding at any time.
(c) AMOUNTS, ETC. No Interest Period relating to Term Loan B or
------------
any portion thereof bearing interest at the Eurodollar Rate shall extend
beyond the date on which a regularly scheduled installment payment of the
principal of Term Loan B is to be made unless a portion of Term Loan B at
least equal to such installment payment has an Interest Period ending on such
date or is a Base Rate Loan.
4.3. OPTIONAL PREPAYMENT OF THE TERM LOANS. The Borrower shall have the right
-------------------------------------
at any time to prepay the Term Notes on or before the Term Loan A Maturity Date
or the Term Loan B Maturity Date, as a whole, or in part, upon not less than
three (3) Business Days' prior written notice to the Agent, without premium or
penalty (but subject to (S)8.10), provided that (a) each partial prepayment
shall be in the principal amount of $1,000,000 or an integral multiple thereof,
and (b) each partial prepayment shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective outstanding amount of
each Bank's Term Note, with adjustments to the extent practicable to equalize
any prior prepayments not exactly in proportion. Any prepayment of principal of
the Term Loans shall include all interest accrued to the date of prepayment and
shall be applied pro rata against the remaining scheduled installments of
principal due on the Term Loans. No amount repaid with respect to the Term Loans
may be reborrowed.
4.4. MANDATORY PREPAYMENT OF THE TERM LOANS AND EXPANSION LOANS.
----------------------------------------------------------
4.4.1. PROCEEDS. Concurrently with the receipt by the Borrower or any
--------
of its Subsidiaries of cash proceeds from (a) sales or other dispositions of
assets (other than the sale or disposition of assets in the ordinary course of
business consistent with past practices) which exceed, in the aggregate,
$5,000,000 over the term of this Credit Agreement and which have not been
either (i) reinvested by the Borrower in replacement assets in which the Agent
shall have a first priority perfected security interest for the benefit of the
Agent and the Banks (subject only to those liens permitted pursuant to (S)12.1
(a) - (f), (S)12.1(k) - (l) and (S)12.1 (n) - (q))within 270 days of receipt
by the Borrower or such Subsidiary (and, for purposes of this (S)4.4.1(a)(i),
to the extent the Borrower or any such Subsidiary purchased any replacement
asset not more than thirty (30) days prior to the Borrower's or such
Subsidiary's receipt of the cash proceeds of any such sale or disposition,
such a purchase shall be considered as being reinvested for purposes
<PAGE>
-38-
of this (S)4.4.1 so long as it is also considered to be a reinvestment
pursuant to (S)4.9 of the New Notes Indenture), or (ii) subject to a
commitment by the Borrower or such Subsidiary pursuant to any contract to be
used to make such a reinvestment in replacement assets in which the Agent
shall have a first priority perfected security interest for the benefit of the
Agent and the Banks (subject only to those liens permitted pursuant to (S)12.1
(a) - (f), (S)12.1(k) - (l) and (S)12.1 (n) - (q)), subject only to customary
conditions (other than the obtaining of financing), on or prior to the 270th
day following the Borrower's or such Subsidiary's receipt of the cash proceeds
and the cash proceeds contractually committed are so applied within 365 days
following receipt of such proceeds, (b) the sale of stock, partnership
interests or other equity issuances of the Borrower or any of its Subsidiaries
other than in connection with the Borrower's equity incentive plan, (c)
insurance claims received by the Borrower or its Subsidiaries which have not
been either (i) reinvested by the Borrower or such Subsidiary within one year
of receipt by such Person of such proceeds (and, for purposes of this
(S)4.4.1(c)(i), to the extent the Borrower or any such Subsidiary purchased
any replacement asset or commenced repairs not more than ninety (90) days
prior to the Borrower's or such Subsidiary's receipt of the claimed amounts
but after the casualty that gave rise to such proceeds, such a purchase or
repair costs shall be considered as being reinvested for purposes of this
(S)4.4.1) or (ii) subject to a commitment by the Borrower or such Subsidiary
pursuant to any contract to be used to make such a reinvestment, subject only
to customary conditions (other than the obtaining of financing), on or prior
to the 270th day following the Borrower's or such Subsidiary's receipt of the
claimed amount and the claimed amounts contractually committed are so applied
within 365 days following receipt of such amounts, the Borrower shall pay to
the Agent for the respective accounts of the Banks an amount equal to 100% of
such proceeds, to be applied pro rata to each of the Term Loans based on the
--- ----
then outstanding amounts of the Term Loans and applied against the scheduled
installments of principal due on the respective Term Loans in the inverse
order of maturity, or, if there are no amounts outstanding under the Term
Loans to permanently reduce the Total Expansion Commitment by such amount
(with any prepayments on the Expansion Loan being made only to the extent
necessary to reduce the outstanding Expansion Loan to an amount not in excess
of the Total Expansion Commitment, as reduced hereby) and, if there are no
Advances outstanding and the Expansion Commitment has been reduced to $0, to
be applied to the outstanding Revolving Credit Loans and to permanently reduce
the Total Commitment by such amount.
4.4.2. EXCESS CASH FLOW RECAPTURE. The Borrower promises to pay to the
--------------------------
Agent for the pro rata account of the Banks on or before April 15 of each
--- ----
calendar year ending on or after the Borrower's fiscal year ending closest to
December 31, 1997 an amount equal to (a) fifty percent (50%) of the
Consolidated Excess Cash Flow for (i) the period from the Closing Date through
the end of the fiscal year ending closest to December 31, 1997 and (ii) for
the Borrower's fiscal years ending closest to December 31, 1998 and (b)
seventy-five percent (75%) of the Consolidated Excess Cash Flow for each of
the Borrower's fiscal years ending closest to December 31, 1999 and each
December 31 thereafter, provided,
--------
<PAGE>
-39-
however any payments required to be made pursuant to this 4.4.2 for any fiscal
-------
year shall not be required to be made if the Borrower can demonstrate to the
reasonable satisfaction of the Agent that the Leverage Ratio as at the end of
each of (a) the fiscal year for which such payments are to be made and (b) the
fiscal quarter occurring immediately preceding the date such payment would
otherwise be due and payable was less than 3.00:1.00. Such payments shall be
applied pro rata to each of the Term Loans and the Expansion Loan, and, as to
--- ----
the Term Loans, based on the then outstanding amounts of the Term Loans and
applied against the scheduled installments of principal due on the respective
Term Loans on a pro rata basis, and as to the Expansion Loan, in accordance
--- ----
with (S)6.2.2 (with any prepayments on the Expansion Loan being made only to
the extent necessary to reduce the outstanding Expansion Loan to an amount not
in excess of the Total Expansion Commitment, as reduced hereby), or, if there
are no amounts outstanding under the Term Loans and the Expansion Loan, to be
applied to the outstanding Revolving Credit Loans and to permanently reduce
the Total Commitment by such amount.
4.4.3. APPLICATION. In the event any holder of a Term B Note elects not
-----------
to receive any prepayments it is otherwise entitled to receive pursuant to
this (S)4.4 and so notifies the Agent in writing of such election, the entire
amount of all such prepayments such holder was otherwise entitled to receive
pursuant to this (S)4.4 shall be applied to the Term Loan A and the Expansion
Loan, and, if there are not outstanding amounts due under the Term Loan A or
the Expansion Loan and the Expansion Commitment has been reduced to $0, then
to repay outstanding Revolving Credit Loans and to permanently reduce the
Total Commitment by such amount.
4.4.4. EXPIRATION OF ADDITIONAL TENDER PERIOD. The Borrower promises to
--------------------------------------
pay on the expiration of the Additional Tender Period, and there shall become
absolutely due and payable on such date, the aggregate amount of the
Untendered Amount outstanding on such date, which amount shall be applied to
the outstanding principal amount of the Term Loan A in the inverse order of
maturity.
5. THE EXPANSION LOAN.
------------------
5.1. COMMITMENT TO LEND.
------------------
5.1.1. COMMITMENTS.
-----------
5.1.1.1. INITIAL DISBURSEMENT PERIOD. Subject to the terms and
---------------------------
conditions set forth in this Credit Agreement (including, but not
limited to those requirements set forth in (S)5.1.2 below and (S)(S)14
and 15 hereof), each of the Banks severally agrees during the Initial
Disbursement Period (as hereinafter defined), upon the request of the
Borrower, to make to the Borrower, and the Borrower may borrow, repay
and reborrow from time to time during the Initial Disbursement Period,
its Commitment Percentage of the Advances (as hereinafter defined) of
the Expansion
<PAGE>
-40-
Loan to the Borrower on each Permitted Acquisition Closing Date or
Construction Drawdown Date, as the case may be. The aggregate amount of
all outstanding Advances of the Expansion Loan (after giving effect to
all amounts requested) by any Bank at any time shall not exceed such
Bank's Expansion Commitment and the aggregate amount of all outstanding
Advances of the Expansion Loan (after giving effect to all amounts
requested) at any time shall not at any time exceed the Total Expansion
Commitment. In addition, no Advance shall exceed the lesser of (a) the
Total Expansion Commitment and (b) the actual purchase price for each
Permitted Financed Acquisition or the amount needed to fund the entire
Project, Petro:Lube Project or New Profit Center Project, as the case
may be, less the amount of outstanding Advances previously funded for
----
such Project, Petro:Lube Project or New Profit Center Project, as the
case may be. Subject to the provisions of (S)5.1.1.2 hereof, the
several Expansion Commitments of the Banks to make Advances shall
terminate on January 30, 2000.
5.1.1.2. SUBSEQUENT DISBURSEMENT PERIOD. In the event that on
---------- ------------ ------
January 30, 2000 the aggregate outstanding amount of all Advances is
less than the Total Expansion Commitment (the "Available Amount"),
then, subject to the terms and conditions set forth in this Credit
Agreement (including, but not limited to those requirements set forth
in (S)5.1.2 below and (S)(S)14 and 15 hereof), each of the Banks
severally agrees during the Subsequent Disbursement Period (as
hereinafter defined), upon the request of the Borrower, to make its
Commitment Percentage of the Advances (as hereinafter defined) of the
Expansion Loan to the Borrower on each Permitted Acquisition Closing
Date or Construction Drawdown Date, as the case may be. The aggregate
amount of all Advances of the Expansion Loan (after giving effect to
all amounts requested) made by any Bank during the Subsequent
Disbursement Period shall not exceed such Bank's Expansion Commitment
and the aggregate amount of all Advances of the Expansion Loan (after
giving effect to all amounts requested) made during the Subsequent
Disbursement Period shall not at any time exceed the lesser of (a) the
Available Amount and (b) $10,000,000. In addition, no Advance made
during the Subsequent Disbursement Period shall exceed the lesser of
(a) (i) the Available Amount and (ii) $10,000,000 and (b) the actual
purchase price for each Permitted Financed Acquisition or amount needed
to fund that portion of the Project, Petro:Lube Project or New Profit
Center Project, as the case may be, for which the Advance is being
requested. The several Expansion Commitments of the Banks to make
Advances shall terminate on January 30, 2001. If repaid, Advances made
during the Subsequent Disbursement Period may not be reborrowed.
5.1.2. CONDITIONS TO ADVANCES. Advances of principal may be requested
----------------------
by the Borrower during the period from (a) the Closing Date through and
including January 30, 2000 (the "Initial Disbursement Period"), and, (b) in
the event that on January 30, 2000 the aggregate outstanding amount of all
Advances is less than the Total Expansion Commitment, from January 30, 2000
through and
<PAGE>
-41-
including January 30, 2001 (the "Subsequent Disbursement Period") on the
following terms and conditions (each portion of the Expansion Loan so
advanced on a particular date being an "Advance"). The Borrower shall give
to the Agent written notice in the form of Exhibit B-2 hereto (or telephonic
-----------
notice confirmed in writing in the form of Exhibit B-2 hereto) of each
-----------
Advance requested hereunder (an "Advance Request") no later than 1:00 p.m.
(Boston time) (a) one (1) Business Day prior to the proposed Drawdown Date
of any Base Rate Loan and (b) three (3) Eurodollar Business Days prior to
the proposed Drawdown Date of any Eurodollar Rate Loan; provided, however,
-------- -------
the Borrower shall not request any Eurodollar Rate Loans until the date
which is the earlier to occur of (i) thirty (30) days following the Closing
Date and (ii) the date on which the syndication of the Loans hereunder has
been completed, without the Agent's consent. Each such notice shall specify
(i) the principal amount of the Advance requested, (ii) the proposed
Drawdown Date of such Advance; (iii) the Interest Period of such Advance,
and (iv) the Type of such Advance. In addition, each Advance Request shall
be accompanied by a certification from the Borrower that such Advance is
either "Permitted Debt" (as such term is defined in the New Notes Indenture)
or is permitted to be incurred by the Borrower pursuant to (S)4.6 of the New
Notes Indenture, and, to the extent the Borrower certifies that it is
incurring such Indebtedness pursuant to (S)4.6 of the New Notes Indenture,
such certification shall also include the Borrower's calculation of the
Interest Coverage Ratio (as such term is defined in the New Notes Indenture)
demonstrating compliance with (S)4.6 of the New Notes Indenture. Promptly
upon receipt of any such notice, the Agent shall notify each of the Banks
thereof. Each Advance Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the Advance requested
from the Banks on the proposed Drawdown Date. Each Advance Request shall be
in a minimum amount of $100,000, or such smaller amount as may be needed to
complete the Project, the Petro:Lube Project, the New Profit Center Project
or the Other Permitted Acquisition, as the case may be, or that is remaining
under the Total Expansion Commitment. In addition, the Borrower shall comply
with all of the provisions and conditions set forth in (S)(S)14 and 15
hereof. Subject to the foregoing, and subject to satisfaction of the
conditions set forth in (S)(S)14 and 15, each Bank shall lend to the
Borrower such Bank's Commitment Percentage of the Advance so requested in
immediately available funds not later than the close of business on such
Drawdown Date.
5.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
--------------
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate of one-half of one percent (1/2%) on the
average daily amount during each calendar quarter or portion thereof from the
Closing Date to the end of the Initial Disbursement Period by which the Total
Expansion Commitment exceeds the outstanding amount of the Expansion Loan during
such calendar quarter. The Borrower further agrees to pay the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate of one-half of one percent (1/2%) on the
average daily amount during each calendar quarter thereof during the Subsequent
Disbursement Period on the amount by which the Available Amount, or if less,
$10,000,000, exceeds the aggregate Advances
<PAGE>
-42-
made during the Subsequent Disbursement Period. The commitment fee shall be
payable quarterly in arrears on the last day of each calendar quarter for such
calendar quarter commencing on the first such date following the Closing Date,
with a final payment on the last day of the Disbursement Period or any earlier
date on which the Expansion Commitments shall terminate.
5.3. SCHEDULED INSTALLMENT PAYMENTS OF PRINCIPAL ON THE EXPANSION LOAN. The
-----------------------------------------------------------------
Borrower promises to pay to the Agent for the account of the Banks the principal
amount of the Expansion Loan as follows:
(a) Fifty percent (50%) of the aggregate amount of all Advances outstanding
on the last day of the Initial Disbursement Period less any reductions in the
----
Total Expansion Commitment made in accordance with (S)6.2.2 hereof shall be
payable in eight (8) equal consecutive quarterly installments, and shall be due
and payable on the last day of each calendar quarter of each calendar year,
commencing on March 31, 2000;
(b) Fifty percent (50%) of the aggregate amount of all Advances made during
the Subsequent Disbursement Period and outstanding on the last day of the
Subsequent Disbursement Period less any reductions in the Total Expansion
----
Commitment made in accordance with (S)6.2.2 shall be payable in four (4) equal
consecutive quarterly installments, and shall be due and payable on the last day
of each calendar quarter of each calendar year, commencing on March 31, 2001;
and
(c) the remaining unpaid balance of the Expansion Loan shall be absolutely
due and payable on the Expansion Loan Maturity Date.
5.4. REDUCTION OF TOTAL EXPANSION COMMITMENT. The Borrower shall have the
---------------------------------------
right at any time and from time to time upon three (3) Business Days prior
written notice to the Agent to reduce by $1,000,000 or an integral multiple of
$1,000,000 in excess thereof or terminate entirely the Total Expansion
Commitment, whereupon the Expansion Commitments of the Banks shall be reduced
pro rata in accordance with their respective Commitment Percentages of the
- --- ----
amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this (S)5.4,
the Agent will notify the Banks of the substance thereof. Upon the effective
date of any such reduction or termination, the Borrower shall pay to the Agent
for the respective accounts of the Banks the full amount of any commitment fee
then accrued on the amount of the reduction. No reduction or termination of the
Expansion Commitments may be reinstated.
5.5. THE NOTES. The Expansion Loan shall be evidenced by separate promissory
---------
notes of the Borrower in substantially the form of Exhibit A-4 hereto (each an
------- ---
"Expansion Note"), dated as of the Closing Date and completed with appropriate
insertions. One Expansion Note shall be payable to the order of each Bank in a
principal amount equal to such Bank's Expansion Commitment or, if less, the
outstanding amount of all Advances made by such Bank, plus interest accrued
thereon, as set forth below. The Borrower irrevocably authorizes each Bank to
make or cause to be made, at or about the time of the Drawdown Date of any
Advance or at the time of receipt of any payment of principal on such Bank's
Expansion Note, an appropriate notation on such Bank's
<PAGE>
-43-
Expansion Note Record reflecting the making of such Advance or (as the case may
be) the receipt of such payment. The outstanding amount of the Expansion Loan
set forth on such Bank's Expansion Note Record shall be prima facie evidence of
----- -----
the principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Expansion
Note Record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Expansion Note to make payments of principal of or
interest on any Expansion Note when due.
5.6. INTEREST ON EXPANSION LOAN.
--------------------------
5.6.1. INTEREST RATES. Except as otherwise provided in (S)8.11, the
--------------
Expansion Loan shall bear interest during each Interest Period relating to all
or any portion of the Expansion Loan at the following rates:
(a) to the extent that all or any portion of the Expansion Loan bears
interest during such Interest Period at the Base Rate, the Expansion Loan or
such portion shall bear interest during such Interest Period at the rate per
annum equal to the Base Rate plus the Applicable Margin.
(b) to the extent that all or any portion of the Expansion Loan bears
interest during such Interest Period at the Eurodollar Rate, the Expansion
Loan or such portion shall bear interest during such Interest Period at the
rate per annum equal to the Eurodollar Rate plus the Applicable Margin.
The Borrower promises to pay interest on the Expansion Loan or any
portion thereof outstanding during each Interest Period in arrears on each
Interest Payment Date applicable to such Interest Period.
5.6.2. NOTIFICATION BY BORROWER. The Borrower shall notify the Agent,
------------------------
such notice to be irrevocable, at least three (3) Business Days prior to the
Drawdown Date of any Advance if all or any portion of such Advance is to bear
interest based on the Eurodollar Rate. After any Advance has been made, the
provisions of (S)2.7 shall apply mutatis mutandis with respect to the Advances
------- --------
so that the Borrower may have the same interest rate options with respect to
all or any portion of the Advances as it would be entitled to with respect to
the Revolving Credit Loans (subject to the same limitations as apply to
Revolving Credit Loans under (S)2.7, except as to the minimum integral
multiples of partial conversions, which, in the case of the Expansion shall be
in integral multiple of $250,000); provided, however, the Borrower shall not
-------- -------
be permitted to have more than five (5) Eurodollar Rate Advances outstanding
at any time.
5.6.3. AMOUNTS. No Interest Period relating to the Expansion Loan or
-------
any portion thereof bearing interest at the Eurodollar Rate shall extend
beyond the date on which a regularly scheduled installment payment of the
principal of the Expansion Loan is to be made unless a portion of the
Expansion Loan at least equal to such installment payment has an Interest
Period ending on such date or is a Base Rate Loan.
<PAGE>
-44-
5.7. BORROWER'S REQUISITION. At such time as the Borrower shall desire to
----------------------
obtain an Advance or all or any portion of a Revolving Credit Loan to fund all
or any Property Costs associated with any Project, the Borrower, in addition to
complying with the Advance Request set forth in (S)5.1.2 (and, as to the
Revolving Credit Loan, the Loan Request set forth in (S)2.6), shall complete,
execute and deliver to the Agent a Borrower's Requisition in the form attached
hereto as Exhibit O (hereinafter referred to as "Borrower's Requisition"), which
------- -
shall include the following information:
(a) the total amount of the Advance or Revolving Credit Loan, as the
case may be, being requested, together with an explanation in sufficient
detail as to the application of the proceeds of such Advance or Revolving
Credit Loan, as the case may be, as well as the total amount currently due and
payable (set forth in an itemized format) on the Project for which the Advance
or Revolving Credit Loan, as the case may be, is requested;
(b) for the first Advance or Revolving Credit Loan, as the case may
be, requested in each fiscal quarter of the Borrower, written lien waivers
from the Contractor and such laborers, subcontractors and materialmen for work
done and materials supplied by them which were paid for pursuant to the
Advance Request or Loan Request, as the case may be, from the preceding fiscal
quarter;
(c) a detailed report of all material changes in the Plans and
Specifications, the Construction Budget, the Disbursement Schedule or the
Construction Schedule, as well as a reconciliation to the Construction Budget
and the Plans and Specifications; and
(d) such other information, documentation and certification as the
Agent shall reasonably request.
5.8. FUNDS FOR ADVANCES.
------------------
5.8.1. FUNDING PROCEDURES. Not later than 11:00 a.m. (Boston time) on
------------------
the proposed Drawdown Date of any Advance, each of the Banks will make
available to the Agent, at the Agent's Head Office, in immediately available
funds, the amount of such Bank's Commitment Percentage of the amount of the
requested Advance. Upon receipt from each Bank of such amount, and upon
receipt of the documents required by (S)(S)14 (if on the Closing Date) and 15
and the satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the Borrower the aggregate amount
of such Advance made available to the Agent by the Banks. The failure or
refusal of any Bank to make available to the Agent at the aforesaid time and
place on any Drawdown Date the amount of its Commitment Percentage of the
requested Advance shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other Bank's
Commitment Percentage of any requested Advance.
5.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
-----------------
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
<PAGE>
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made available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Advances to be made on such Drawdown Date, and
the Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount. If any Bank
makes available to the Agent such amount on a date after such Drawdown Date,
such Bank shall pay to the Agent on demand an amount equal to the product of
(a) the average computed for the period referred to in clause (c) below, of
the weighted average interest rate per annum paid by the Agent for federal
funds acquired by the Agent during each day included in such period, times (b)
-----
the amount of such Bank's Commitment Percentage of such Advance, times (c) a
-----
fraction, the numerator of which is the number of days that elapse from and
including such Drawdown Date to the date on which the amount of such Bank's
Commitment Percentage of such Advance shall become immediately available to
the Agent, and the denominator of which is 365. A statement of the Agent
submitted to such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent by such
----- -----
Bank. If the amount of such Bank's Commitment Percentage of such Advance is
not made available to the Agent by such Bank within three (3) Business Days
following such Drawdown Date, the Agent shall be entitled to recover such
amount from the Borrower on demand, with interest thereon at the rate per
annum applicable to the Advance made on such Drawdown Date.
6. REPAYMENT OF THE EXPANSION LOAN.
-------------------------------
6.1. MATURITY. The Borrower promises to pay on the Expansion Loan Maturity
--------
Date, and there shall become absolutely due and payable on the Expansion Loan
Maturity Date, the aggregate amount of the Expansion Loan outstanding on such
date, together with any and all accrued and unpaid interest thereon.
6.2. MANDATORY REPAYMENTS OF LOANS.
-----------------------------
6.2.1. AVAILABILITY EXCEEDED. If at any time the sum of the outstanding
---------------------
amount of the Advances exceeds the Total Expansion Commitment, and, during the
Subsequent Disbursement Period if at any time the sum of the outstanding
Advances of the Expansion Loan (after giving effect to all amounts requested)
made during the Subsequent Disbursement Period exceeds the lesser of (a) the
Available Amount and (b) $10,000,000, then the Borrower shall immediately pay
the amount of such excess to the Agent for the respective accounts of the
Banks for application to the Expansion Loan. Each payment of any portion of
the Expansion Loan shall be allocated among the Banks, in proportion, as
nearly as practicable, to the respective unpaid principal amount of each
Bank's Expansion Note, with adjustments to the extent practicable to equalize
any prior payments or repayments not exactly in proportion.
6.2.2. EXCESS CASH FLOW. To the extent the Borrower is required
----------------
pursuant to (S)4.4.2 hereof to make any payments in respect of its
Consolidated Excess Cash Flow, to the extent such a requirement occurs during
the Disbursement Period, the portion of such required reduction in the Total
Expansion Commitment to be
<PAGE>
-46-
applied to the Expansion Loan shall be applied pro rata to the scheduled
--- ----
installments of principal due on the Expansion Loan pursuant to (S)5.3(a) and
(b) and to permanently reduce the Total Expansion Commitment by such amount.
To the extent such a repayment requirement occurs after the Disbursement
Period, the portion of such payments to be applied to the Expansion Loan shall
be applied pro rata to all scheduled installments of principal due on the
--- ----
Expansion Loan.
6.3. OPTIONAL REPAYMENTS OF LOAN. The Borrower shall have the right, at its
---------------------------
election, to repay the outstanding amount of the Advances, as a whole or in
part, at any time without penalty or premium (but subject to (S)8.10). The
Borrower shall give the Agent, no later than 11:00 a.m., Boston time, at least
one (1) Business Day's prior written notice of any proposed prepayment pursuant
to this (S)6.3 of Base Rate Loans, and three (3) Eurodollar Business Days' prior
written notice of any proposed prepayment pursuant to this (S)6.3 of Eurodollar
Rate Loans, in each case specifying the proposed date of prepayment of the Loan
and the principal amount to be prepaid. Each such partial prepayment of any
Advance shall be in an integral multiple of $500,000, shall be accompanied by
the payment of accrued interest on the principal prepaid to the date of
prepayment and shall be applied, in the absence of instruction by the Borrower,
first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans or both, at the Agent's option. Each partial prepayment
shall be allocated among the Banks, in proportion, as nearly as practicable, to
the respective unpaid principal amount of each Bank's Expansion Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
7. LETTERS OF CREDIT.
-----------------
7.1. LETTER OF CREDIT COMMITMENTS.
----------------------------
7.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms and
-------------------------------------
conditions hereof and the execution and delivery by the Borrower of a letter
of credit application on the Agent's customary form (a "Letter of Credit
Application"), the Agent on behalf of the Banks and in reliance upon the
agreement of the Banks set forth in (S)7.1.4 and upon the representations and
warranties of the Borrower contained herein, agrees, in its individual
capacity, to issue, extend and renew for the account of the Borrower one or
more standby letters of credit (individually, a "Letter of Credit"), in such
form as may be requested from time to time by the Borrower and agreed to by
the Agent; provided, however, that, after giving effect to such request, (a)
-------- -------
the sum of the aggregate Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not exceed $5,000,000 at any one time and (b) the sum of (i)
the Maximum Drawing Amount on all Letters of Credit, (ii) all Unpaid
Reimbursement Obligations, and (iii) the amount of all Revolving Credit Loans
outstanding shall not exceed the Total Commitment.
7.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit Application
-----------------------------
shall be completed to the satisfaction of the Agent. In the event that any
provision of any Letter of Credit Application shall be inconsistent with any
<PAGE>
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provision of this Credit Agreement, then the provisions of this Credit
Agreement shall, to the extent of any such inconsistency, govern, it being
understood and agreed that the provisions of the Letter of Credit Application
regarding indemnification, set-off, insecurity and default shall be governed
by the indemnification, set-off, default and remedies provisions of this
Credit Agreement.
7.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
--------------------------
extended or renewed hereunder shall, among other things, (a) provide for the
payment of sight drafts for honor thereunder when presented in accordance with
the terms thereof and when accompanied by the documents described therein, and
(b) have an expiry date no later than the Revolving Credit Loan Maturity Date.
Each Letter of Credit so issued, extended or renewed shall be subject to the
Uniform Customs.
7.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally agrees
----------------------------------
that it shall be absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent whatsoever, to
the extent of such Bank's Revolving Credit Loan Commitment Percentage, to
reimburse the Agent on demand for the amount of each draft paid by the Agent
under each Letter of Credit to the extent that such amount is not reimbursed
by the Borrower pursuant to (S)7.2 (such agreement for a Bank being called
herein the "Letter of Credit Participation" of such Bank).
7.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank shall
-----------------------
be treated as the purchase by such Bank of a participating interest in the
Borrower's Reimbursement Obligation under (S)7.2 in an amount equal to such
payment. Each Bank shall share in accordance with its participating interest
in any interest which accrues pursuant to (S)7.2.
7.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the Agent to
----------------------------------------
issue, extend and renew each Letter of Credit and the Banks to participate
therein, the Borrower hereby agrees to reimburse or pay to the Agent, for the
account of the Agent or (as the case may be) the Banks, with respect to each
Letter of Credit issued, extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in (S)7.2(b) and (c) and
subject to the last sentence of (S)7.3, on each date that any draft presented
under such Letter of Credit is honored by the Agent, or the Agent otherwise
makes a payment with respect thereto, (i) the amount paid by the Agent under
or with respect to such Letter of Credit, and (ii) the amount of any taxes,
fees, charges or other costs and expenses reasonably incurred by the Agent or
any Bank in connection with any payment made by the Agent or any Bank under,
or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total Commitment to
an amount less than the Maximum Drawing Amount, an amount equal to such
<PAGE>
-48-
difference, which amount shall be held by the Agent for the benefit of the
Banks and the Agent as cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the acceleration
of the Reimbursement Obligations with respect to all Letters of Credit in
accordance with (S)16, an amount equal to the then Maximum Drawing Amount on
all Letters of Credit, which amount shall be held by the Agent for the benefit
of the Banks and the Agent as cash collateral for all Reimbursement
Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this (S)7.2 at any time from the date such amounts become due
and payable (whether as stated in this (S)7.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in (S)8.11 for overdue principal on the
Revolving Credit Loans. Cash collateral held by the Agent pursuant to this
(S)7.2 shall, at the written request of the Borrower, be invested (at the
Borrower's risk) in overnight or other short term investments reasonably
acceptable to the Agent. The Agent shall maintain a perfected security interest
in such investments in a manner satisfactory to it. Interest or other earnings
on such investments shall constitute additional cash collateral but shall be
released to the Borrower at its request from time to time, to the extent that
the amount of cash collateral exceeds the amount required by this (S)7.2.
7.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
-------------------------
demand for payment shall be made under any Letter of Credit, the Agent shall
notify the Borrower of the date and amount of the draft presented or demand for
payment and of the date and time when it expects to pay such draft or honor such
demand for payment. If the Borrower fails to reimburse the Agent as provided in
(S)7.2 on or before the date that such draft is paid or other payment is made by
the Agent, the Agent may at any time thereafter notify the Banks of the amount
of any such Unpaid Reimbursement Obligation. No later than 3:00 p.m. (Boston
time) on the Business Day next following the receipt of such notice, each Bank
shall make available to the Agent, at its Head Office, in immediately available
funds, such Bank's Revolving Credit Loan Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (a)
the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (b) the amount equal to
-----
such Bank's Revolving Credit Loan Commitment Percentage of such Unpaid
Reimbursement Obligation, times (c) a fraction, the numerator of which is the
-----
number of days that elapse from and including the date the Agent paid the draft
presented for honor or otherwise made payment to the date on which such Bank's
Revolving Credit Loan Commitment Percentage of such Unpaid Reimbursement
obligation shall become immediately available to the Agent, and the denominator
of which is 360. All such payments shall constitute a Revolving Credit Loan made
to the Borrower (irrespective of the satisfaction by the Borrower of the
conditions set forth in (S)15 hereof or the requirement of the Borrower to
deliver a Loan Request pursuant to (S)2.6 hereof). The responsibility of the
Agent to the Borrower and the Banks shall be only to determine that the
documents (including each draft) delivered under each Letter of Credit in
<PAGE>
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connection with such presentment shall be in conformity on their face in all
material respects with such Letter of Credit.
7.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this (S)7 shall be
--------------------
absolute and unconditional under any and all circumstances and irrespective of
the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which the Borrower
may have or have had against the Agent, any Bank or any beneficiary of a Letter
of Credit. The Borrower further agrees with the Agent and the Banks that the
Agent and the Banks shall not be responsible for, and the Borrower's
Reimbursement Obligations under (S)7.2 shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Letter of Credit or any financial institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrower against the beneficiary of any Letter of Credit or
any such transferee. The Agent and the Banks shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit.
The Borrower agrees that any action taken or omitted by the Agent or any Bank
under or in connection with each Letter of Credit and the related drafts and
documents, if done in good faith, shall be binding upon the Borrower and shall
not result in any liability on the part of the Agent or any Bank to the
Borrower, subject, however, to the last sentence of (S)7.3.
7.5. RELIANCE BY ISSUER. To the extent not inconsistent with (S)7.4, the Agent
------------------
shall be entitled to rely, and shall be fully protected in relying upon, any
Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement unless it shall first have
received such advice or concurrence of the Majority Banks as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Majority Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
the Banks and all future holders of the Revolving Credit Notes or of a Letter of
Credit Participation.
7.6. LETTER OF CREDIT FEE. The Borrower shall pay to the Agent a fee (in each
--------------------
case, a "Letter of Credit Fee") (a) in respect of each standby Letter of Credit
issued pursuant to this Credit Agreement, equal to the Applicable Margin at the
date of issuance, extension or renewal of such Letter of Credit multiplied by
the face amount of each such Letter of Credit, plus an issuance fee in respect
----
of each standby Letter of Credit equal to 1/8% on the face amount of each such
Letter of Credit (the "Standby Issuance Fee"), and the Agent shall in turn remit
to each Bank its pro rata portion of
--------
<PAGE>
-50-
such Letter of Credit Fee (but not the Standby Issuance Fee), and (b) in respect
of each documentary Letter of Credit issued pursuant to this Letter of Credit
Agreement, equal to the Applicable Margin at the date of issuance, extension or
renewal of such Letter of Credit multiplied by the face amount of each such
Letter of Credit, plus an issuance fee in respect of each documentary Letter of
----
Credit equal to 1/8% on the face amount of each such Letter of Credit (the
"Documentary Issuance Fee"), and the Agent shall in turn remit to each Bank its
pro rata portion of such Letter of Credit Fee (but not the Documentary Issuance
- --- ----
Fee). The Letter of Credit Fee for each Letter of Credit shall be payable
quarterly in advance, on the date of issuance, extension or renewal of such
Letter of Credit and quarterly thereafter. In addition, the Borrower shall pay
to the Agent, for its own account, the Agent's standard issuance, processing,
negotiation, amendment and administrative fees, determined in accordance with
customary fees and charges for similar facilities.
8. CERTAIN GENERAL PROVISIONS.
--------------------------
8.1. FEES PAYABLE TO AGENT.
---------------------
8.1.1. CLOSING FEE. The Borrower shall pay to the Agent for its own
-----------
account on the Closing Date a closing fee as set forth in the letter agreement
dated as of the Closing Date between the Borrower and the Agent.
8.1.2. AGENT'S FEE. The Borrower shall pay to the Agent quarterly in
-----------
advance, for the Agent's own account, on the Closing Date and on each March,
June, September and December thereafter, an Agent's fee as set forth in the
letter agreement dated as of the Closing Date between the Borrower and the
Agent.
8.2. PAYMENTS TO AGENT. All payments of principal, interest, Reimbursement
-----------------
Obligations, commitment fees, Letter of Credit Fees and any other amounts due
hereunder or under any of the other Loan Documents shall be made to the Agent,
for the respective accounts of the Banks and the Agent, at the Agent's Head
Office or at such other location in the Boston, Massachusetts, area that the
Agent may from time to time designate, in each case in immediately available
funds. All such payments may be made by debiting an account of the Borrower with
the Agent containing sufficient funds to make such payment; and the Borrower
hereby authorizes the Agent to debit any such account to make payments hereunder
when due
8.3. TAXES. (a) Any and all payments by the Borrower to each Bank or the Agent
-----
under this Credit Agreement and any Note shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, the Borrower shall
pay all Other Taxes.
(b) To the fullest extent permitted by applicable law, the Borrower agrees to
indemnify and hold harmless each Bank and the Agent for the full amount of Taxes
and Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this (S)8.3) paid by such Bank or the Agent and any
liability (including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally
<PAGE>
-51-
asserted. Payment under this indemnification shall be made within thirty (30)
days after the date the Bank or the Agent makes written demand therefor in
accordance with this (S)6.3.
(c) If the Borrower shall be required by law to deduct or withhold any Taxes
or Other Taxes from or in respect of any sum payable hereunder to any Bank or
the Agent, then: (i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this (S)8.3) such Bank
or the Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions or withholdings been made; (ii) the
Borrower shall make such deductions and withholdings; and (iii) the Borrower
shall pay the full amount deducted or withheld to the relevant taxing authority
or other authority in accordance with applicable law.
(d) Notwithstanding anything to the contrary contained in this Credit
Agreement, each of the Borrower and the Agent shall be entitled, to the extent
it is required to do so by law, to deduct or withhold income or other similar
taxes imposed by the United States of America from interest, fees or other
amounts payable hereunder for the account of any Bank (without the payment by
the Borrower of increased amounts to such Bank pursuant to clause (a), (b) or
(c) above) other than a Bank (i) which is a domestic corporation (as such term
is defined in Section 7701 of the Code) for federal income tax purposes or (ii)
which has the Prescribed Forms on file with the Borrower and the Agent for the
applicable year, provided that if the Borrower shall so deduct or withhold any
--------
such taxes, it shall provide a statement to the Agent and such Bank, setting
forth the amount of such taxes so deducted or withheld, the applicable rate and
any other information or documentation which such Bank or the Agent may
reasonably request for assisting such Bank or the Agent to obtain any allowable
credits or deductions for the taxes so deducted or withheld in the jurisdiction
or jurisdictions in which such Bank is subject to tax.
(e) Within thirty (30) days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent. Should any Bank or the Agent ever receive
any refund, credit or deduction from any taxing authority to which such Bank or
the Agent would not be entitled but for the payment by the Borrower of Taxes as
required by this (S)8.3 (it being understood that the decision as to whether or
not to claim, and if claimed, as to the amount of any such refund, credit or
deduction shall be made by such Bank or the Agent in its sole discretion), such
Bank or the Agent, as the case may be, thereupon shall repay to the Borrower an
amount with respect to such refund, credit or deduction equal to any net
reduction in taxes actually obtained by such Bank or the Agent, as the case may
be, and determined by such Bank or the Agent, as the case may be, to be
attributable to such refund, credit or deduction.
(f) Each Bank shall use its reasonable best efforts (consistent with its
internal policies and legal and regulatory restrictions) to select a
jurisdiction for its lending office or change the jurisdiction of its lending
office, as the case may be, so as to avoid
<PAGE>
-52-
the imposition of any Taxes or Other Taxes or to eliminate any such additional
payment by the Borrower which may thereafter accrue; provided that no such
--------
selection or change shall be made if, in the judgment of such Bank, such
selection or change would be disadvantageous to such Bank.
8.4. COMPUTATIONS. All computations of interest on the Loans and of commitment
------------
fees, Letter of Credit Fees or other fees shall, unless otherwise expressly
provided herein, be based on a 360-day year and paid for the actual number of
days elapsed. Except as otherwise provided in the definition of the term
"Interest Period" with respect to Eurodollar Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Revolving Credit Note
Records and the Term Note Records from time to time shall be considered correct
and binding on the Borrower, absent manifest error, unless within twenty (20)
Business Days after receipt of any notice by the Borrower of such outstanding
amount, the Borrower shall notify the Agent to the contrary.
8.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
--------------------------------------
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrower and the Banks) to the Borrower and the
Banks. In such event (a) any Loan Request, Advance Request or Conversion Request
with respect to Eurodollar Rate Loans shall be automatically withdrawn and shall
be deemed a request for Base Rate Loans, (b) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period relating
thereto, become a Base Rate Loan, and (c) the obligations of the Banks to make
Eurodollar Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Banks.
8.6. ILLEGALITY. Notwithstanding any other provisions herein, if any present
----------
or future law, regulation, treaty or directive or change in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (b) such
Bank's Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law. The Borrower hereby agrees promptly to pay the Agent for
the account of such Bank, upon demand by such Bank, any additional amounts
necessary to compensate such Bank for any costs incurred by such Bank in making
any conversion in accordance with this (S)8.6, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Loans hereunder.
<PAGE>
-53-
8.7. ADDITIONAL COSTS, ETC. If any present or future applicable law, which
---------------------
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
the Agent by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall:
(a) impose or increase or render applicable (other than to the extent
specifically provided for in (S)8.8 or elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against assets
held by, or deposits in or for the account of, or loans by, or letters of
credit issued by, or commitments of an office of any Bank, or
(b) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan Documents,
any Letters of Credit, the Loans, such Bank's Commitment, such Bank's
Expansion Commitment or any class of loans, letters of credit or commitments
of which any of the Loans or such Bank's Commitment or Expansion Commitment
forms a part, and the result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding, issuing,
renewing, extending or maintaining any of the Loans or such Bank's
Commitment or Expansion Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or the Agent hereunder
on account of such Bank's Commitment or Expansion Commitment, any
Letter of Credit or any of the Loans, or
(iii) to require such Bank or the Agent to make any payment or to
forego any interest or Reimbursement Obligation or other sum payable
hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such Bank or
the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank
or (as the case may be) the Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Bank or the Agent such
additional amounts as will be sufficient to compensate such Bank or the Agent
for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum; provided, however, the Borrower shall not
-------- -------
be liable for any increased amounts incurred or accrued more than 90 days prior
to the giving by such Bank or (as the case may be) the Agent to the Borrower of
the demand for such increased amounts.
<PAGE>
-54-
8.8. CAPITAL ADEQUACY. If any Bank or the Agent determines after the date
----------------
hereof that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Loans to a level below that which such Bank or the Agent could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or the Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Agent to be material,
then such Bank or the Agent may notify the Borrower of such fact. To the extent
that the amount of such reduction in the return on capital is not reflected in
the Base Rate, the Borrower agrees to pay such Bank or (as the case may be) the
Agent for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Bank or (as the case may be)
the Agent of a certificate in accordance with (S)8.9 hereof. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis. The Borrower shall not be liable for any amounts pursuant to
this (S)8.8 incurred or accruing more than ninety (90) days prior to the
presentation of such certificate.
8.9. CERTIFICATE. Acertificate setting forth any additional amounts payable
-----------
pursuant to (S)(S)8.7 or 8.8 and a brief explanation of such amounts which are
due, submitted by any Bank or the Agent to the Borrower, shall be conclusive,
absent manifest error, that such amounts are due and owing.
8.10. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold each
---------
Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (b) default
by the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request, notice (in the case of all or any
portion of Term Loan A pursuant to (S)4.1.4(b) or Term Loan B pursuant to
(S)4.2.4(b) or all or any portion of an Advance pursuant to (S)5.1) or a
Conversion Request relating thereto in accordance with (S)2.6, (S)2.7,
(S)4.1.4(b), (S)4.2.4(b) or (c) or (S)5.6 the making of any payment of a
Eurodollar Rate Loan or the making of any conversion of any such Loan to a Base
Rate Loan on a day that is not the last day of the applicable Interest Period
with respect thereto, including interest or fees payable by such Bank to lenders
of funds obtained by it in order to maintain any such Loans.
<PAGE>
-55-
8.11. INTEREST AFTER DEFAULT.
----------------------
8.11.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
---------------
permitted by applicable law) interest on the Loan and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall bear
interest compounded monthly and payable on demand at a rate per annum equal to
three percent (3%) above the rate otherwise in effect for Base Rate B Loans
until such amount shall be paid in full (after as well as before judgment).
8.11.2. AMOUNTS NOT OVERDUE. During the continuance of a Default or
-------------------
an Event of Default, the principal amount of the Loans not overdue shall,
until such Default or Event of Default has been cured or remedied or such
Default or event of Default has been waived by the Majority Banks pursuant to
(S)29, bear interest at a rate per annum equal to the two percent (2%) above
the rate of interest otherwise applicable to such Loans pursuant to (S)2.5,
(S)4.1.4, (S)4.2.4 and (S)5.6.
8.12. INTEREST LIMITATION. It is the intention of the parties hereto that each
-------------------
Bank shall conform strictly to usury laws applicable to it. Accordingly, if the
transactions contemplated hereby would be usurious as to any Bank under laws
applicable to it (including the laws of the United States of America or any
other jurisdictions whose laws may be mandatorily applicable to such Bank
notwithstanding the other provision of the Notes), then, in that event,
notwithstanding anything to the contrary in the Notes, the Loan Documents, the
Credit Agreement or any other agreements entered into in connection with or as
security the Notes, it is agreed as follows: (a) the aggregate of all
consideration which constitutes interest under laws applicable to any Bank that
is contracted for, taken, reserved, charged or received by such Bank under the
Notes, the Loan Documents, the Credit Agreement or any other agreements entered
into in connection with or as security for the Notes or otherwise in connection
with the Notes shall under no circumstances exceed the maximum amount allowed by
such applicable law, and any excess shall be cancelled automatically and if
theretofore paid shall be credited by such Bank on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Bank to the
Borrower); and (b) in the event that the maturity of the Notes is accelerated by
reason of an election of the holder thereof resulting from any Event of Default
under the Notes, or in the event of any required or permitted prepayment, then
such consideration that constitutes interest under law applicable to any Bank
may never include more than the maximum amount allowed by such applicable law,
and excess interest, if any, provided for in the Notes or otherwise shall be
cancelled automatically by such Bank as of the date of such acceleration or
prepayment and, if therefore paid, shall be credited by such Bank on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Bank to the Borrower). All sums paid or agreed to be paid to
any Bank for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted by laws applicable to such Bank, be amortized, prorated,
allocated and spread through the term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
does not exceed the maximum amount allowed by such applicable law. If at any
time and from time to time (a) the amount of interest payable
<PAGE>
-56-
to any Bank on any date shall be computed at the highest lawful rate applicable
to such Bank pursuant to this paragraph and (b) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Bank would be less than the amount of interest payable to such Bank computed at
the highest lawful rate applicable to such Bank, then the amount of interest
payable to such Bank in respect of such subsequent interest computation period
shall continue to be computed at the highest lawful rate applicable to such Bank
until the total amount of interest payable to such Bank shall equal the total
amount of interest which would have been payable to such Bank if the total
amount of interest had been computed without giving effect to this paragraph.
To the extent that Article 5069-1.04 of the Texas Revised Civil Statutes is
relevant to any Bank for the purpose of determining the highest lawful rate,
each such Bank hereby elects to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect.
8.13. REPLACEMENT OF BANK. In the event that any Bank makes a demand for
-------------------
payment pursuant to (S)(S)8.3., 8.7 or 8.8, or terminates the Commitment of the
Bank to make, or convert Loans of another Type to, Eurodollar Rate Loans
pursuant to (S)8.6, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace such Bank in accordance with this (S)8.13. If
the Borrower determines to replace such Bank, the Borrower shall have the right
to replace such Bank with an entity that is an Eligible Assignee (a "Replacement
-----------
Bank"); provided that such Replacement Bank, (a) shall be reasonably acceptable
- ----
to the Agent, (b) shall unconditionally offer in writing (with a copy to the
Agent) to purchase all of such Bank's rights under the Loan Documents and
interest in the Loans owing to such Bank, each Note held by such Bank and the
Reimbursement Obligations owing to such Bank, in each case without recourse, at
the principal amount of such Obligations plus interest and fees accrued thereon
to the date of such purchase on a date therein specified, and (c) shall execute
and deliver to the Agent an Assignment and Acceptance in accordance with (S)22
hereof. Upon satisfaction of the requirements set forth in the second sentence
of this (S)8.13, acceptance of such offer to purchase by the Bank to be
replaced, payment to such Bank of the purchase price in immediately available
funds, and the payment by the Borrower of all requested costs accruing to the
date of purchase which the Borrower is obligated to pay under (S)8.10 and all
other amounts owed by the Borrower to such Bank (other than the principal of and
interest on the Notes and Reimbursements Obligations of such Bank purchased by
the Replacement Bank), and execution of the Assignment and Acceptance by all
parties thereto in accordance with (S)22 hereof, the Replacement Bank shall
constitute a "Bank" hereunder with a Commitment as so specified and the Bank
being so replaced shall no longer constitute a "Bank" hereunder and shall
thereupon be released from any and all liabilities in respect of the Credit
Agreement and the other Loan Documents. If, however, (i) a Bank accepts such an
offer and such proposed Replacement Bank fails to purchase such rights and
interests on such specified date in accordance with the terms of such offer and
to execute an Assignment and Acceptance, the Borrower shall continue to be
obligated to pay the increased costs or additional amounts due to such Bank
pursuant to (S)(S)8.3, 8.7 or 8.8 (if a demand for repayment of increased costs
or additional amounts pursuant to any of such Sections is the basis for the
proposed replacement), as the case may be, or (ii) the Bank proposed to be
replaced
<PAGE>
-57-
fails to accept such purchase offer, the Borrower (if the basis for the proposed
replacement is a demand for payment of increased costs or additional amounts
pursuant to (S)(S)8.3, 8.7 or 8.8) shall not be obligated to pay to such Bank
such increased costs or additional amounts incurred or accrued from and after
the date of such purchase offer.
9. COLLATERAL SECURITY AND GUARANTIES.
----------------------------------
9.1. SECURITY OF BORROWER. The Obligations shall be equally and ratably
--------------------
secured by a perfected first priority security interest in or lien on the
Collateral (subject only to Permitted Liens entitled to priority under
applicable law) pursuant to the terms of the Security Documents to which the
Borrower is a party.
9.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. The Obligations shall also be
---------------------------------------
guaranteed pursuant to the terms of the Guaranty. The obligations of the
Borrower's Subsidiaries under the Guaranty shall be in turn equally and ratably
secured by a perfected first priority security interest in or lien on the
Collateral (subject only to Permitted Liens entitled to priority under
applicable law) pursuant to the terms of the Security Documents to which such
Subsidiary is a party.
10. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the Agent as follows:
10.1. PARTNERSHIP AND CORPORATE AUTHORITY.
-----------------------------------
10.1.1. EXISTENCE; GOOD STANDING. (a) The Borrower (i) is a limited
------------------------
partnership duly organized, validly existing and in good standing under the
laws of its state of organization, (ii) has all requisite partnership power to
own its property and conduct its business as now conducted and presently
contemplated and (iii) is duly authorized to do business in each jurisdiction
where such qualification is necessary except where failure to be so qualified
would not have a materially adverse effect on the business, assets or
financial condition of the Borrower and its Subsidiaries, considered as a
whole;
(b) Each of Petro Financial, Petro Distributing and the general
partners of the Borrower (i) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (ii) has
all requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, including, without limitation,
with respect to the general partners of the Borrower, to act as general
partner of the Borrower, and (iii) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction where
such qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or
financial condition of the Borrower and its Subsidiaries, considered as a
whole.
10.1.2. AUTHORIZATION. The execution, delivery and performance of
-------------
this Credit Agreement and the other Loan Documents to which the Borrower or
any of its Subsidiaries is or is to become a party and the transactions
contemplated
<PAGE>
-58-
hereby and thereby by such party (a) are within the corporate or partnership
authority of such party, (b) have been duly authorized by all necessary
corporate or partnership proceedings, (c) do not conflict with or result in
any breach or contravention of any provision of law, statute, rule or
regulation to which such party is subject or any judgment, order, writ,
injunction, license or permit applicable to such party and (d) do not conflict
with any provision of the corporate charter, bylaws, partnership certificate
or partnership agreement, as the case may be, of, or any agreement or other
instrument binding upon, such party.
10.1.3. ENFORCEABILITY. The execution and delivery of this Credit
--------------
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will result in valid and legally
binding obligations of such party enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and by general principles of equity.
10.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by the
----------------------
Borrower and any of its Subsidiaries of this Credit Agreement and the other Loan
Documents to which the Borrower or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby by such party do not
require the approval or consent of, or filing (except as set forth in Schedule
--------
10.18 hereto) with, any governmental agency or authority other than those
- -----
already obtained or, in the case of any filing, approval or consent which may
need to be obtained in connection with (a) the construction of any new Project,
Petro:Lube Project or New Profit Center Project, (b) maintaining the perfected
security interest of the Agent under the Loan Documents, (c) any partnership or
corporate filings necessary in the ordinary course of business (including,
without limitation, necessary filings to maintain good standing and legal
existence of such Person and any necessary securities law filings), and (d) the
maintenance of any existing or after acquired licenses or permits will be
obtained as required by such governmental agency or authority; provided that
--------
certain licenses and permits pertaining to the operation or use of the Mortgaged
Properties may require steps for transfer or reissuance upon foreclosure or the
exercise of other remedies by the Agent or the Banks.
10.3. TITLE TO PROPERTIES; LEASES. Except as indicated on Schedule 10.3
--------------------------- -------- ----
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except for property and assets
sold or otherwise disposed of in the ordinary course of business since that
date), subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.
<PAGE>
-59-
10.4. FINANCIAL STATEMENTS AND PROJECTIONS.
------------------------------------
10.4.1. FINANCIAL STATEMENTS. There has been furnished to each of the
--------------------
Banks a consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of the Borrower's fiscal year ended December, 1995, and a consolidated
statement of income of the Borrower and its Subsidiaries for the fiscal year
then ended, reported on by Coopers & Lybrand L.L.P. together with a copy of
the Borrower's interim unaudited financial statements through September 27,
1996. Such balance sheet and statement of income have been prepared in
accordance with generally accepted accounting principles and fairly present
the financial condition of the Borrower as at the close of business on the
date thereof and the results of operations for the fiscal year then ended.
There are no contingent liabilities of the Borrower or any of its Subsidiaries
as of such date involving material amounts, known to the officers of the
Borrower, which were not disclosed in such balance sheet and the notes related
thereto. The Borrower has also furnished to each of the Banks a pro forma
balance sheet of the Borrower and its Subsidiaries which fairly presents the
estimated financial condition of the Borrower after giving pro forma effect to
the Recapitalization and the transactions contemplated thereby as if the
Recapitalization had occurred on such date.
10.4.2. PROJECTIONS. The projections of the annual balance sheets and
-----------
related statements of income and cash flow of the Borrower and their
Subsidiaries on a consolidated basis for the fiscal years ending nearest
December 31, 1996 through December 31, 2003 most recently delivered to the
Agent have been delivered to the Agent on or prior to the Closing Date. To the
knowledge of the Borrower or any of its Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material adverse change
in any of such projections. The projections were based when made upon
reasonable estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and as of the Closing Date reflect the reasonable
estimates of the Borrower and its Subsidiaries of the results of operations
and other information projected therein, it being understood that the
projections are not guaranties of results and that actual results will vary
from the projections, and such variations may be material.
10.4.3. SOLVENCY. The Borrower and its Subsidiaries, on a
--------
consolidated basis, both before and after giving effect to this Credit
Agreement and the transactions contemplated hereby and thereby, are and will
be solvent (within the meaning contemplated by Section 548 of Title 11 of the
United States Code and any similar state statute which may be applicable),
have and will have assets having a fair value in excess of the amount required
to pay their probable liabilities on their existing debts as they become
absolute and matured, and have and will have access to adequate capital for
the conduct of their business (taking into account the particular capital
requirements of the business conducted by the Borrower and its Subsidiaries
and the projected capital requirements and capital availability therefor) and
the ability to pay their debts from time to time incurred in connection
therewith as such debts mature.
<PAGE>
-60-
10.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there has
------------------------
occurred no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Borrower and its Subsidiaries, considered as a whole.
Since the Balance Sheet Date, the Borrower has not made any Distribution other
than Tax Distributions in amounts which would be permitted hereunder.
10.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and its
------------------------------------
Subsidiaries possesses all material franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict in any material respect with any rights of others.
10.7. LITIGATION. Except as set forth in Schedule 10.7 hereto, there are no
---------- -------- ----
actions, suits, proceedings or investigations of any kind pending or, to its
knowledge, threatened against the Borrower or any of its Subsidiaries before any
court, tribunal or administrative agency or board as to which there is any
reasonable possibility of an adverse determination which could, either in any
case or in the aggregate, materially adversely affect the properties, assets,
financial condition or business of the Borrower and its Subsidiaries, considered
as a whole, or materially impair the right of the Borrower and its Subsidiaries,
considered as a whole, to carry on business substantially as now conducted by
them, or result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the consolidated
balance sheet of the Borrower and its Subsidiaries, or which question the
validity of this Credit Agreement or any of the other Loan Documents, or any
action taken or to be taken pursuant hereto or thereto.
10.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any of
------------------------------------
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, considered
as a whole. Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the business of the Borrower
and its Subsidiaries, considered as a whole.
10.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower nor
--------------------------------------------
any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, partnership certificate, partnership agreement or any
agreement or instrument to which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, statute, license, rule
or regulation, in any of the foregoing cases in a manner that could reasonably
be expected to result in the imposition of substantial penalties or materially
and adversely affect the financial condition, properties or business of the
Borrower and its Subsidiaries, considered as a whole.
<PAGE>
-61-
10.10. TAX STATUS. The Borrower and its Subsidiaries (a) have made or filed
----------
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, (b) have paid all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (c) have set aside on their books
in accordance with generally accepted accounting principles provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction (except for amounts contested in good faith after the Closing
Date as to which the Borrower or the applicable Subsidiary has set aside on its
books adequate provisions in accordance with generally accepted accounting
principles), and the officers of the Borrower know of no basis for any such
claim.
10.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and is
-------------------
continuing.
10.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower nor
-------------------------------------------
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940. Neither the Borrower nor any of its Subsidiaries has engaged in any
transaction with any "affiliated company" or "principal underwriter" of an
"investment company" in violation of the Investment Company Act of 1940.
10.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to Permitted
------------------------------------
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office and currently in effect, that purports
to cover, affect or give notice of any present or possible future lien on, or
security interest in, any material assets or property of the Borrower or any of
its Subsidiaries or any rights relating thereto.
10.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges and
-------------------------------
deposits of documents or instruments have been made and all other actions have
been taken that are necessary or advisable, under applicable law, to establish
and perfect the Agent's security interest in the Collateral (other than filings
to be made by the Agent of financing statements delivered by the Borrower and
its Subsidiaries on the Closing Date or thereafter as may be required by the
Agent). The Collateral and the Agent's rights with respect to the Collateral are
not subject to any setoff, claims, withholdings or other defenses. The Borrower
or a Subsidiary of the Borrower party to one of the Security Agreements is the
owner of the Collateral that is the subject of such Security Agreement free from
any lien, security interest, encumbrance and any other claim or demand, except
for Permitted Liens.
10.15. CERTAIN TRANSACTIONS. Except for transactions pursuant to which the
--------------------
Borrower or any of its Subsidiaries makes payments in the ordinary course of
business
<PAGE>
-62-
upon terms no less favorable than the Borrower or such Subsidiary could obtain
in arms length transactions from third parties, none of the officers, directors,
or employees of the Borrower or any of its Subsidiaries is presently a party to
any transaction with the Borrower or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner, except as disclosed on Schedule
--------
10.15 hereto and except for renewals and extensions of the existing agreements
- -----
described on Schedule 10.15 so long as such renewals and extensions are on
-------- -----
substantially the same terms as the agreement being renewed or extended.
10.16. EMPLOYEE BENEFIT PLANS.
----------------------
10.16.1. IN GENERAL. Except as set forth on Schedule 10.16 hereto,
---------- -------- -----
each Employee Benefit Plan has been maintained and operated in compliance in
all material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions thereunder
respecting prohibited transactions. The Borrower has heretofore delivered to
the Agent the most recently completed annual report, Form 5500, with all
required attachments, and actuarial statement required to be submitted under
(S)103(d) of ERISA, with respect to each Guaranteed Pension Plan.
10.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee Benefit
------------------------------
Plan which is an employee welfare benefit plan within the meaning of (S)3(1)
or (S)3(2)(B) of ERISA, no benefits are due unless the event giving rise to
the benefit entitlement occurs prior to plan termination (except as required
by Title I, Part 6 of ERISA) . The Borrower or an ERISA Affiliate, as
appropriate, may terminate each such Plan in accordance with its terms at any
time (or at any time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Borrower or such ERISA Affiliate without
liability to any Person.
10.16.3. GUARANTEED PENSION PLANS. Each contribution required to be
------------------------
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of (S)302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid) has been
incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed
Pension Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months of
the date of this representation), and on the actuarial methods and assumptions
<PAGE>
-63-
employed for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of (S)4001 of ERISA did not exceed
the aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
10.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA
-------------------
Affiliate has incurred any material liability (including secondary liability)
to any Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under (S)4201 of ERISA or as a result of a sale of
assets described in (S)4204 of ERISA. Neither the Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in reorganization
or insolvent under and within the meaning of (S)4241 or (S)4245 of ERISA or
that any Multiemployer Plan intends to terminate or has been terminated under
(S)4041A of ERISA.
10.17. REGULATIONS U AND X. The proceeds of the Revolving Credit Loans and the
-------------------
Term Loans shall be used solely to convert the Obligations under the Original
Credit Agreement to Obligations hereunder, to pay costs and expenses incurred in
connection with the Recapitalization in an amount not to exceed the amount
permitted by (S)14.23 hereof and thereafter for working capital and partnership
and general corporate purposes and New Site Capital Expenditures (including
making Investments in Subsidiaries to permit such Subsidiaries to make New Site
Capital Expenditures as permitted hereunder) (subject to the limitations set
forth in (S)11.12 hereof). The proceeds of the Advances shall be used solely to
finance the Permitted Financed Acquisitions and New Site Capital Expenditures
associated with any Project, Petro:Lube Project, New Profit Center Project or
Other Permitted Acquisition of a New Profit Center. The Borrower will obtain
Letters of Credit solely for partnership and general corporate purposes. No
portion of any Loan is to be used, and no portion of any Letter of Credit is to
be obtained, for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
10.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all reasonable steps
------------------------
to investigate the past and present condition and usage of the Real Estate and
the operations conducted thereon and, based upon such diligent investigation,
has determined that except as set forth on Schedule 10.18 hereto:
-------- -----
(a) none of the Borrower, its Subsidiaries or any operator of the Real
Estate or any operations thereon is in violation, or, to the best of the
Borrower's knowledge, alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any state or local
statute, regulation, ordinance, order or decree relating to health, safety or
the environment (hereinafter
<PAGE>
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"Environmental Laws"), which violation would have a material adverse effect on
the business, assets or financial condition of the Borrower and its
Subsidiaries, considered as a whole;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation: any federal, state
or local governmental authority, (i) that any one of them has been identified
by the United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous
waste, as defined by 42 U.S.C. (S)6903(5), any hazardous substances as defined
by 42 U.S.C. (S)9601(14), any pollutant or contaminant as defined by 42 U.S.C.
(S)9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of
has been found at any site at which a federal, state or local agency or other
third party has conducted or has ordered that any Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out
of any third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances which
claim, cause of action or proceeding could have any of the effects described
in (S)9.7;
(c) during the period of the Borrower's or its Subsidiaries' ownership,
and to the best of the Borrower's knowledge with respect to all periods prior
thereto: (i) no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances except in accordance
with applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on any
portion of the Real Estate; (ii) in the course of any activities conducted by
the Borrower, its Subsidiaries or operators of its properties, no Hazardous
Substances have been generated or are being used on the Real Estate except in
accordance with applicable Environmental Laws; (iii) there have been no
releases (i.e. any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping) or threatened releases of Hazardous Substances on, upon, into or from
the properties of the Borrower or its Subsidiaries, which releases would have
a material adverse effect on the value of any of the Real Estate or adjacent
properties or the environment; (iv) to the best of the Borrower's knowledge,
there have been no releases on, upon, from or into any real property in the
vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a material
adverse effect on the value of, the Real Estate; and (v) in addition, any
hazardous waste, as defined by 42 U.S.C. (S)6903(5) that has been generated on
any of the Real Estate has been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required under
<PAGE>
-65-
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Borrower's knowledge, operating in compliance with
such permits and applicable Environmental Laws; and
(d) None of the Borrower and its Subsidiaries, any Mortgaged Property
or any of the other Real Estate is subject to any applicable environmental law
requiring the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the transactions
set forth herein and contemplated hereby, or as a condition to the recording
of any Mortgage or to the effectiveness of any other transactions contemplated
hereby.
10.19. SUBSIDIARIES, ETC. As of the Closing Date, Petro Distributing and Petro
-----------------
Financial are the only Subsidiaries of the Borrower. In addition, the Borrower
will not, after the Closing Date, have any other Subsidiaries except as
permitted by the terms of this Credit Agreement. Except as set forth on Schedule
--------
10.19 hereto, and except for transactions listed on Schedule 12.9 and similar
- ----- -------- ----
future arrangements otherwise permitted under this Credit Agreement which might
be deemed to give rise to de facto joint ventures or partnership by operation of
-- -----
general principles of partnership law, neither the Borrower nor any Subsidiary
of the Borrower is engaged in any joint venture or partnership with any other
Person.
10.20. REASONABLY EQUIVALENT VALUE. The Borrower each of its Subsidiaries has
---------------------------
received reasonably equivalent value for the Obligations it has incurred, and
the security interests and mortgages it has granted, hereunder and under the
other Loan Documents. The incurrence by the Borrower and each of its
Subsidiaries of their Obligations and the granting by the Borrower and each of
its Subsidiaries of security interests and mortgages on their properties do not
result in any fraudulent transfer or fraudulent conveyance within the meaning of
any applicable federal or state statute or the interpretation thereof or
relevant common law.
10.21. DISCLOSURE. None of the Recapitalization Documents nor any
----------
representation or warranty made by the Borrower or any of its Subsidiaries in
this Credit Agreement, the Recapitalization Documents or in any agreement,
instrument, document, certificate, written statement or letter furnished to the
Agent or the Banks, by or on behalf of the Borrower or such Subsidiary in
connection with any of the transactions contemplated by any of the Loan
Documents or the Recapitalization Documents contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading as of the time when made or deemed
to be made in light of the circumstances in which they are made. There is no
fact known to the Borrower or any of its Subsidiaries on or as of the Closing
Date which materially adversely affects, or which would, in the reasonable
judgment of the Borrower, materially adversely affect in the reasonably
foreseeable future the financial position, business, operations or affairs of
the Borrower and its Subsidiaries, considered as a whole.
<PAGE>
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10.22. CHIEF EXECUTIVE OFFICES. The Borrower's chief executive office is at
-----------------------
6080 Surety Drive, El Paso, Texas 79905, at which location its books and records
are kept.
10.23. FISCAL YEAR. The Borrower has a fiscal year which is the period of 52
-----------
or 53 weeks ending as set forth on Schedule 10.23.
-------- -----
10.24. NO AMENDMENTS TO CERTAIN DOCUMENTS. Since the Closing Date the Borrower
----------------------------------
has not amended any of the Recapitalization Documents, the New Notes or the New
Notes Indenture in any material respect. Each of the representations and
warranties made by the Borrower in any of the Loan Documents, the New Notes
Indenture, the New Notes or the Recapitalization Documents was true and correct
in all material respects when made and remains true and correct in all material
respects on the Closing Date, except to the extent that any of such
representations and warranties relate, by the express terms thereof, solely to a
date falling prior to the Closing Date, and except to the extent that any of
such representations and warranties may have been affected by the consummation
of the transactions contemplated and permitted by the Loan Documents and the
Recapitalization.
10.25. REPRESENTATIONS UNDER RECAPITALIZATION DOCUMENTS. The Borrower is not
------------------------------------------------
aware of any breach under the Recapitalization Documents or aware that any of
the representations and warranties of the Selling Partners contained in the
Recapitalization Documents is not true and correct in all material respects as
of the Closing Date.
10.26. INSURANCE. The Borrower and each of its Subsidiaries maintains with
---------
financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are in
accordance with sound business practices, with the details of such coverage
being more fully described on Schedule 10.26 hereto, as amended from time to
-------- -----
time in accordance with sound business practices.
10.27. REPRESENTATIONS REGARDING EACH PROJECT.
--------------------------------------
10.27.1. CONDITION OF PROPERTY. Neither the Property nor any portion
---------------------
thereof is, at the time of the initial Advance or Revolving Credit Loan, as
the case may be, requested to fund Property Costs associated with such Project
and at the time of each subsequent request for an advance, damaged or injured
as result of any fire, explosion, accident, flood or other casualty which is
not covered by insurance or has been the subject of any Taking in either case
which could have a material adverse effect on the Project, and to the
knowledge of the Borrower, no Taking which could have a material adverse
effect on the Project is pending or contemplated.
10.27.2. RELEVANT CONTRACTS. At the time of making any Advance Request
------------------
or Loan Request, as the case may be, to fund any Property Costs associated
with any Project, each (a) Construction Contract pertaining thereto is in full
force and effect; (b) both the Borrower and the Contractor are in material
compliance with their respective obligations under the Construction Contract;
(c) the work to be performed by the Contractor under the Construction Contract
is the work called
<PAGE>
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for by the Plans and Specifications and all work required to complete the
Improvements in accordance with the Plans and Specifications is provided for
under the Construction Contract; (d) all work on the Improvements shall be
completed in accordance with the Plans and Specifications in a good and
workmanlike manner and shall be free of any defects; and (e) to the extent the
Project is being constructed on leased Real Estate, that the Borrower is not
in default of any terms of the lease and that the lease is in full force and
effect.
11. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans (including any Advance) or the Agent has
any obligation to issue, extend or renew any Letters of Credit:
11.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause to
----------------
be paid the principal and interest on the Loans, all Reimbursement Obligations,
the Letter of Credit Fees, the commitment fees, the Agent's fee and all other
amounts provided for in this Credit Agreement and the other Loan Documents to
which the Borrower or any of its Subsidiaries is a party, all in accordance with
the terms of this Credit Agreement and such other Loan Documents.
11.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief executive
---------------------
office in El Paso, Texas or at such other place in the United States of America
as the Borrower shall designate upon written notice to the Agent, where notices,
presentations and demands to or upon the Borrower in respect of the Loan
Documents to which the Borrower is a party may be given or made.
11.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each of its
--------------------
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) maintain adequate accounts and reserves,
to the extent required by generally accepted accounting principles, for all
taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves.
11.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will
--------------------------------------------------
deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries, the consolidating balance
sheet of the Borrower and its Subsidiaries, each as at the end of such year,
and the related consolidated statement of income, and consolidated statement
of cash flow and consolidating statement of income and consolidating statement
of cash flow for such year, each setting forth in comparative form the figures
for the previous fiscal year and all such consolidated and consolidating
statements to be in reasonable detail, prepared in accordance with generally
accepted accounting
<PAGE>
-68-
principles, and such consolidated statements are reported upon without
qualification by a nationally recognized independent certified public
accounting firm that is currently known as a "Big Six" accounting firm or by
other independent certified public accountants of nationally recognized
standing, together with a written statement from such accountants to the
effect that they have read a copy of (S)13 of this Credit Agreement in
connection with their audit of the Borrower and its Subsidiaries, and that, in
making the examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default under (S)13 of the Credit
Agreement, or, if such accountants shall have obtained knowledge of any then
existing Default or Event of Default under (S)13 of the Credit Agreement they
shall disclose in such statement any such Default or Event of Default;
provided that such accountants shall not be liable to the Banks for failure to
--------
obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of each of the fiscal quarters of the Borrower, copies
of the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the Borrower and
its Subsidiaries, each as at the end of such quarter, and the related
consolidated statement of income, consolidated statement of cash flow,
consolidating statement of income, and consolidating statement of cash flow
for the portion of the Borrower's fiscal year then elapsed, all in reasonable
detail, showing operating contribution on a Stopping Center by Stopping Center
basis and the comparison of the Borrower's performance for such period to the
Borrower's projected budget for such period, and prepared in accordance with
generally accepted accounting principles, together with a certification by the
principal financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial position
of the Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially the
form of Exhibit C hereto (the "Compliance Certificate") and setting forth in
------- -
reasonable detail computations evidencing compliance with the covenants
contained in (S)13 and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof, copies of all
material of a financial nature filed with the Securities and Exchange
Commission;
(e) not later than January 31 of each year, or such later time as agreed
to by the Agent, budgets of the Borrower and its Subsidiaries for such year;
(f) from time to time such other financial data and information as the
Agent or any Bank may reasonably request; and
<PAGE>
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(g) as soon as practicable, but in any event not later than forty-five
days after April 30, 1997, a Compliance Certificate setting forth in
reasonable detail computations evidence compliance with the covenant contained
in (S)13.6.
11.5. NOTICES.
-------
11.5.1. DEFAULTS. The Borrower will promptly upon becoming aware
--------
thereof, notify the Agent and each of the Banks in writing of the occurrence
of any Default or Event of Default, together with a statement of the President
or Chief Financial Officer of the Borrower setting forth the details of such
Default or Event of Default and the action which the Borrower has taken or
proposes to take with respect thereto. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any other
note, evidence of indebtedness, indenture or other obligation having a
principal amount of $250,000 or more, to which or with respect to which the
Borrower or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, the Borrower shall promptly give
written notice thereof to the Agent and each of the Banks, describing the
notice or action and the nature of the claimed default.
11.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give notice to
--------------------
the Agent and each of the Banks (a) of any violation of any Environmental Law
that the Borrower or any of its Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially affect the
assets, liabilities, financial conditions or operations of the Borrower and
its Subsidiaries, considered as a whole, or the Agent's mortgages, deeds of
trust or security interests pursuant to the Security Documents.
11.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower will,
----------------------------------------
promptly after becoming aware thereof, notify the Agent and each of the Banks
in writing of any setoff, claims (including, with respect to the Real Estate,
environmental claims), withholdings or other defenses to which any of the
Collateral having a value in excess of $250,000, or the Agent's rights with
respect to such Collateral, are subject, except for Permitted Liens.
11.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and will
----------------------------------
cause each of its Subsidiaries to, give notice to the Agent and each of the
Banks in writing within fifteen (15) days of becoming aware of any litigation
or proceedings threatened in writing or any pending litigation and proceedings
against the Borrower or any of its Subsidiaries or to which the Borrower or
any of its Subsidiaries is or becomes a party involving a claim against the
Borrower or any of its Subsidiaries that could reasonably be expected to have
a materially adverse effect on the Borrower and its Subsidiaries, considered
as a whole, and stating the nature and status of such litigation or
proceedings. The Borrower
<PAGE>
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will, and will cause each of its Subsidiaries to, give notice to the Agent and
each of the Banks, in writing, in form and detail satisfactory to the Agent,
within ten (10) days of any judgment, final or otherwise, against the Borrower
or any of its Subsidiaries in an amount which exceeds applicable insurance
coverage by more than $250,000.
11.6. EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will do or cause to
------------------------------------
be done all things necessary to preserve and keep in full force and effect its
partnership existence, rights and franchises and to preserve and keep in full
force and effect the partnership or corporate existence of its general partner
and Subsidiaries, and those of their general partners, and the rights and
franchises of its Subsidiaries, except where the loss or termination of such
rights or franchises or, in the case of a Subsidiary, the corporate or
partnership existence, will have a material adverse effect on the Borrower and
its Subsidiaries considered as a whole; provided that this sentence shall not
--------
prohibit any transactions permitted by (S)12.4 and (S)12.5. It (a) will cause
all of its properties and those of its Subsidiaries used or useful in the
conduct of its business or the business of its Subsidiaries to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment, (b) will cause to be made all necessary repairs, renewals and
replacements thereof, all as in the judgment of the Borrower may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each of its
Subsidiaries to, continue to engage primarily in the businesses now conducted by
them (considering the Borrower and its Subsidiaries as a whole) and in related
businesses (including expansions of such business or related business); provided
--------
that nothing in this (S)11.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the reasonable judgment of the
Borrower, desirable in the conduct of its or their business and that does not,
with other such discontinuances, in the aggregate materially adversely affect
the business of the Borrower and its Subsidiaries on a consolidated basis. Such
properties may be disposed of if such a disposition is permitted by (S)12.5.2
hereof
11.7. INSURANCE. The Borrower will, and will cause each of its Subsidiaries
---------
to, maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and contingencies
as shall be in accordance with the schedule of insurance coverages set forth in
Schedule 10.26 hereto and the general practices of businesses engaged in similar
- -------- -----
activities in similar geographic areas and in amounts, containing such terms, in
such forms and for such periods as may be reasonable and prudent and in
accordance with the terms of the Security Agreements. The Borrower will, and
will cause each of its Subsidiaries to, maintain insurance on the Mortgaged
Properties in accordance with the terms of the Mortgages to which it is a party;
provided, however, that notwithstanding the provisions of the Mortgages, flood
- -------- -------
and earthquake coverages under all-risk property insurance shall be subject to
an aggregate limit of not less than $3,000,000 rather than $5,000,000 for all
Mortgaged Properties other than the Mortgaged Property in Corning, California.
<PAGE>
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11.8. TAXES. The Borrower will, and will cause each of its Subsidiaries to,
-----
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
--------
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves, to the
extent required by generally accepted accounting principles, with respect
thereto; and provided further that the Borrower and each Subsidiary of the
-------- -------
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
11.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
---------------------------------------
11.9.1. GENERAL. The Borrower shall permit the Banks, through the
-------
Agent or any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries, to
examine the books of account of the Borrower and its Subsidiaries (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances
and accounts of the Borrower and its Subsidiaries with, and to be advised as
to the same by, its and their officers, all at such reasonable times and
intervals as the Agent or any Bank may reasonably request.
11.9.2. COMMERCIAL FINANCE EXAMINATIONS. The Borrower will permit the
-------------------------------
Agent's commercial finance examiners to visit the Borrower's premises and
conduct an audit of the Borrower's books and records. The Borrower agrees to
pay the reasonable fees and expenses of such commercial finance examinations.
11.9.3. APPRAISALS. In addition to the appraisals required by (S)14,
----------
periodically, upon the request of the Agent, the Borrower will obtain and
deliver to the Agent appraisal reports in form and substance and from
appraisers satisfactory to the Agent, stating the then current fair market,
orderly liquidation and forced liquidation values of all or any portion of the
equipment or real estate owned by the Borrower or any of its Subsidiaries. The
determination as to whether to require appraisals of some or all of the
Mortgaged Property pursuant to this (S)11.9.3 shall be at the sole discretion
of the Banks taking into account applicable laws and regulatory requirements
(including, without limitation, FIRREA), then existing market conditions, and
such other factors as the Banks deem relevant. Such appraisals will occur no
more frequently than once each calendar year, or more frequently as determined
by the Agent if a Default or Event of Default shall have occurred and be
continuing.
11.9.4. ENVIRONMENTAL ASSESSMENTS. In addition to those site
-------------------------
assessments required by (S)14, the Agent may, from time to time, in its
discretion for the purpose of assessing and ensuring the value of any
Mortgaged Property, obtain one or more environmental assessments or audits of
such Mortgaged
<PAGE>
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Property prepared by a hydrogeologist, an independent engineer or other
qualified consultant or expert approved by the Agent to evaluate or confirm
(a) whether any Hazardous Substances are present in the soil or water at such
Mortgaged Property and (b) whether the use and operation of such Mortgaged
Property complies with all Environmental Laws. Environmental assessments may
include without limitation detailed visual inspections of such Mortgaged
Property including any and all storage areas, storage tanks, drains, dry wells
and leaching areas, and the taking of soil samples, surface water samples and
ground water samples, as well as such other investigations or analyses as the
Agent reasonably deems appropriate. All such environmental assessments shall
be conducted and made at the expense of the Borrower.
11.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower
------------------------------------------------------
will, and will cause each of its Subsidiaries to, comply in all material
respects with (a) the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws, (b) the provisions of its
partnership certificate, partnership agreement, charter documents and by-laws,
(c) all material agreements and instruments by which it or any of its properties
may be bound and (d) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or under any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agent and
the Banks with evidence thereof.
11.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon filing the
----------------------
same with the Department of Labor or Internal Revenue Service upon request of
the Agent, furnish to the Agent a copy of the most recent actuarial statement
required to be submitted under (S)103(d) of ERISA and Annual Report, Form 5500,
with all required attachments, in respect of each Guaranteed Pension Plan and
(b) promptly upon receipt or dispatch, furnish to the Agent any notice, report
or demand sent or received in respect of a Guaranteed Pension Plan under
(S)(S)302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect
of a Multiemployer Plan, under (S)(S)4041A, 4202, 4219, 4242, or 4245 of ERISA.
11.12. USE OF PROCEEDS. The Borrower will use the proceeds of (a) the
---------------
Revolving Credit Loans and the Term Loans solely to convert the Obligations
under the Original Credit Agreement to Obligations hereunder, to pay costs and
expenses incurred in connection with the Recapitalization, for working capital
and general corporate or partnership purposes and for New Site Capital
Expenditures (including making Investments in Subsidiaries to permit such
Subsidiaries to make New Site Capital Expenditures as permitted hereunder),
provided, however, neither the Borrower nor any of its Subsidiaries shall not be
- -------- -------
permitted to make New Site Capital Expenditures with the proceeds of all or any
portion of the Revolving Credit Loans in excess of $7,500,000 at any time
outstanding in the aggregate during the term of this Credit Agreement and (b)
the Advances solely to finance the Permitted Financed Acquisitions and New Site
<PAGE>
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Capital Expenditures associated with any Project, Petro:Lube Project, New Profit
Center Project or Other Permitted Acquisition of a New Profit Center, provided,
--------
however, (i) the Borrower only be permitted to finance New Profit Centers with
- -------
the proceeds of Advances in an aggregate amount of $5,000,000 at any time
outstanding during the term of this Credit Agreement; and provided, further that
-------- -------
the Borrower shall not make New Site Capital Expenditures consisting of New
Profit Centers in excess of the sum of (1) $7,500,000 in the aggregate during
the term of this Credit Agreement plus (2) the aggregate amount of proceeds
which the Borrower or any of its Subsidiaries receives from the sale of an
existing New Profit Center. The Borrower will obtain Letters of Credit solely
for general corporate or partnership purposes.
11.13. FURTHER ASSURANCES. The Borrower will, and will cause each of its
------------------
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
11.14. ADDITIONAL MORTGAGED PROPERTY. If, after the Closing Date, the Borrower
-----------------------------
or any of its Subsidiaries acquires or leases Real Estate to be used as a
Stopping Center or Petro:Lube, the Borrower shall, or shall cause such
Subsidiary to, simultaneously with such acquisition, deliver to the Agent a
fully executed mortgage or deed of trust and other documents in order to give
the Agent, for the benefit of the Banks, a first priority mortgage on and
security interest in such Real Estate and related personal property, subject
only to Permitted Liens, all in form and substance satisfactory to the Agent,
together with title insurance policies, surveys, environmental assessments,
evidences of insurances with the Agent named as loss payee and additional
insured, legal opinions and other documents and certificates with respect to
such Real Estate as was required for Mortgaged Property of the Borrower or such
Subsidiary as of the Closing Date. The Borrower further agrees that, following
the taking of such actions with respect to such Real Estate, the Agent shall
have for the benefit of the Banks and the Agent a valid and enforceable first
priority mortgage or deed of trust over and security interest in such real
estate and related personal property, free and clear of all defects and
encumbrances except for Permitted Liens.
11.15. INTEREST RATE PROTECTION ARRANGEMENTS. Within sixty (60) days of the
-------------------------------------
Closing Date, the Borrower shall obtain interest rate protection arrangements
satisfactory to the Agent which shall cover at least forty percent (40%) of the
principal amount of the Term Loans and shall have a term reasonably acceptable
to the Agent, and the Borrower shall maintain such interest rate protection
arrangements or replacements thereof acceptable to the Agent during the term of
this Credit Agreement.
11.16. COST OVERRUNS. In the event the Borrower becomes aware of any change in
-------------
Property Costs which will increase the Project's Construction Budget (as the
Construction Budget is revised from time to time and approved by the Agent)
which would cause such Construction Budget to be increased by more than ten
percent (10%), the Borrower shall immediately notify the Agent in writing and
promptly submit to the Agent for its approval a
<PAGE>
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revised Construction Budget. No further Advances or Revolving Credit Loans for
such Project need be made by the Agent unless and until the revised Construction
Budget so submitted by the Borrower to the Agent is approved by the Agent, and
the Agent reserves the right to approve or disapprove of any revised
Construction Budget in its sole and absolute discretion.
11.17. CONTINGENCY RESERVE. The Borrower covenants and agrees that the amount
-------------------
allocated as Contingency Reserves in each Construction Budget shall not exceed
ten percent (10%) without the prior approval of the Agent.
11.18. DEPOSIT OF FUNDS ADVANCED. The Borrower may open and maintain an
-------------------------
account with the Agent into which the Agent shall deposit the proceeds of each
Advance or Revolving Credit Loans which is permitted to be funded hereunder and
the proceeds of which are to be used within one year of the Drawdown Date of
such Advance or Revolving Credit Loans for a Project, a Petro:Lube Project or a
New Profit Center Project. The Agent is hereby irrevocably authorized to charge
any account of the Borrower with the Agent, including such account, without the
further approval of the Borrower, for (a) any expenses incurred by the Agent or
any Bank (including, without limiting the generality of the foregoing,
Construction Inspector fees and reasonable attorneys' fees), or (b) any other
sums due to the Agent or any of the Banks under the Expansion Notes, the
Revolving Credit Notes, this Credit Agreement or any of the other Loan
Documents, all to the extent that the same are not paid by the respective due
dates thereof.
11.19. ADVANCES TO CONTRACTOR. Upon the occurrence and during the continuance
----------------------
of a Default or Event of Default, or upon the request of the Borrower, as the
case may be, at its option the Agent may make any or all advances for
construction expenses directly to the Contractor for deposit in an appropriately
designated special bank account, and the execution of this Credit Agreement by
the Borrower shall, and hereby does, constitute an irrevocable authorization so
to advance the proceeds of any Advance or Revolving Credit Loans. No further
authorization from the Borrower shall be necessary to warrant such direct
advances to the Contractor and all such advances shall satisfy pro tanto the
--- -----
obligations of the Agent and the Banks hereunder and shall be secured by the
Security Documents and the other Loan Documents as fully as if made directly to
the Borrower.
11.20. CONSTRUCTION INSPECTOR. The Borrower agrees to permit the Agent to
----------------------
retain the Construction Inspector at the cost of the Borrower to perform the
following services on behalf of the Agent;
(a) to review and advise the Agent whether, in the opinion of the
Construction Inspector, the Plans and Specifications are satisfactory;
(b) to review Advance Requests, applicable Loan Requests and change
orders;
(c) to make periodic inspections for the purpose of assuring that
construction of the Improvements to date is in accordance with the Plans and
Specifications and to approve the Borrower's then current Advance Request or
<PAGE>
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Loan Request, as the case may be, as being consistent with the Construction
Budget and the Borrower's obligations under this Credit Agreement.
The fees of the Construction Inspector shall be paid by the Borrower forthwith
upon billing therefor and expenses incurred by the Agent on account thereof
shall be reimbursed to the Agent forthwith upon request therefor, but neither
the Agent nor the Construction Inspector shall have any liability to the
Borrower on account of (i) the services performed by the Construction Inspector,
(ii) any neglect or failure on the part of the Construction Inspector to
properly perform its services, or (iii) any approval by the Construction
Inspector of construction of the Improvements. Neither the Agent nor the
Construction Inspector assumes any obligation to the Borrower or any other
person concerning the quality of construction of the Improvements or the absence
therefrom of defects.
11.21. LANDLORD CONSENTS. The Borrower shall use commercially reasonable
------------------
measures to deliver to the Agent within thirty (30) days from the Closing Date
updated landlord consents from the landlords of the leased Real Estate located
in Effingham, Illinois and Hammond, Louisiana, which landlord consents shall be
in form and substance satisfactory to the Agent.
12. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans (including the Advances) or the Agent has
any obligations to issue, extend or renew any Letters of Credit:
12.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not permit
-----------------------------
any of its Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
(b) Indebtedness in respect of long term supply contracts consistent
with industry practices;
(c) Indebtedness in respect of taxes, assessments, governmental charges
or levies and claims for labor, materials and supplies to the extent that
payment therefor shall not at the time be required to be made in accordance
with the provisions of (S)11.8;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review
<PAGE>
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and in respect of which a stay of execution shall have been obtained pending
such appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business;
(f) Indebtedness evidenced by the Old Notes and by the guaranty thereof
by Petro Distributing, the Warrants and additional Old Notes which may be
issued upon exchange of the Warrants in accordance with the terms thereof and
Indebtedness evidenced by the New Notes (including without limitation any
guaranties of such New Notes by the Subsidiaries);
(g) obligations of the Borrower under Capitalized Leases; provided that
--------
the aggregate principal amount of all such Indebtedness of the Borrower and
its Subsidiaries permitted pursuant to this (S)12.1(g) shall not exceed the
aggregate amount of $2,000,000 at any one time;
(h) Indebtedness existing on the date hereof and listed and described
on Schedule 12.1 hereto, including the remaining unamortized portion of the
-------- ----
original issue discount of such Indebtedness;
(i) Indebtedness of a Subsidiary of the Borrower existing on the
Closing Date to the Borrower or another Subsidiary; provided that the same are
--------
evidenced by promissory notes, leases or contracts in form and substance
satisfactory to the Agent which are pledged to the Agent for the benefit of
the Banks;
(j) Indebtedness of the Borrower to a Subsidiary of the Borrower so
long as (i) such Indebtedness is subordinated to the Obligations pursuant to
the terms of the subordination agreement attached hereto as Exhibit I and (ii)
------- -
such Indebtedness complies with the applicable provisions of the New Notes
Indenture relating to intercompany debt limitations;
(k) Indebtedness in respect of performance, surety or appeal bonds
obtained in the ordinary course of the Borrower's business and in connection
with transactions in the ordinary course of the Borrower's business;
(l) Indebtedness under fuel price swaps, fuel price caps, and fuel
price collar or floor agreements, and similar agreements or arrangements
designed to protect against or manage fluctuations in fuel prices with respect
to fuel sold in the ordinary course of business of the Borrower and its
Subsidiaries in amounts and on terms consistent with past practices of the
Borrower and its Subsidiaries ;
(m) Indebtedness in respect of Distributions permitted under this
Credit Agreement and accruals or declarations of such Distributions;
(n) Indebtedness in respect of contribution, indemnification and
reimbursement obligations owed by the Borrower or any of its Subsidiaries to
any of the other of them in respect of the Old Notes, and the Notes under this
<PAGE>
-77-
Credit Agreement or other Indebtedness permitted hereunder, provided that any
--------
such Indebtedness of the Borrower to a Subsidiary shall be subordinated in the
manner provided in (S)12.1(j);
(o) Indebtedness consisting of guaranties by the Borrower or any of its
Subsidiaries of Indebtedness of any of the other of them permitted under this
Credit Agreement; provided that, except for guaranties by the Borrower
--------
provided in connection with Indebtedness permitted by subsection (b) hereof,
the Borrower provides a copy of any such guaranty to the Agent at the time
such guaranty is made;
(p) Indebtedness under interest rate swap agreements or similar
interest rate protection agreements;
(q) Indebtedness of the Borrower or any of its Subsidiaries incurred in
connection with the acquisition after the date hereof of any Capital Assets by
the Borrower or such Subsidiary to the seller of such Capital Asset; provided
--------
that (i) the terms of such Indebtedness do not contain interest rates greater
than twelve and one-half percent (12 1/2%), amortization requirements which
result in a shorter average life, earlier maturities, prepayment penalties,
premiums or other costs and expenses, or affirmative covenants, negative
covenants or defaults which are materially more restrictive to the Borrower or
its Subsidiaries than the terms of this Credit Agreement; (ii) the maturity of
such Indebtedness occurs after the Term Loan B Maturity Date; and (iii) if the
aggregate outstanding principal amount of all such Indebtedness is in excess
of $2,000,000, such Indebtedness shall be subordinated to the Obligations on
terms satisfactory to the Agent;
(r) Indebtedness of the Borrower or any of its Subsidiaries assumed or
acquired in connection with the acquisition after the date hereof of any
Capital Assets by the Borrower or such Subsidiary; provided, that (i) such
--------
Indebtedness is either unsecured Indebtedness or secured only by all or any
portion of the Capital Asset being acquired and (ii) the aggregate amount of
all such Indebtedness of the Borrower and its Subsidiaries pursuant to this
(S)12.1(r) shall not exceed the aggregate outstanding principal amount of
$10,000,000 at any time;
(s) Indebtedness of the Borrower or any of its Subsidiaries, as
applicable, incurred to refinance and replace Indebtedness of such Person
permitted under clauses (g), (h), (q) and (r) hereof, provided that (i) the
principal amount (or committed principal amount) of such refinancing or
replacement Indebtedness shall not exceed the outstanding principal amount (or
committed principal amount) of the Indebtedness being refinanced or replaced,
plus all penalties, premiums and costs associated therewith; (ii) such
refinancing or replacement Indebtedness does not contain amortization
requirements which result in a shorter average life, earlier maturities,
higher interest rates, prepayment penalties, premiums or other costs and
expenses, or affirmative covenants, negative covenants or defaults which are
materially more restrictive to the
<PAGE>
-78-
Borrower or such Subsidiary, as applicable, than the similar requirements of
the Indebtedness being refinanced or replaced; and (iii) as to clauses (q) and
(r) hereof, such Indebtedness shall only be permitted to be refinanced or
replaced to the extent the Total Expansion Commitment was reduced at the time
such Indebtedness was incurred;
(t) Indebtedness of the Borrower or any of its Subsidiaries in respect
of any deferred purchase price obligations of the Borrower or such Subsidiary
for equipment in the amount not to exceed, the aggregate outstanding principal
amount of, $3,000,000; and
(u) other Indebtedness not otherwise permitted by this (S)12.1;
provided that the aggregate outstanding principal amount of all such
--------
Indebtedness of the Borrowers, and its Subsidiaries permitted pursuant to this
(S)12.1(u) shall not exceed the aggregate outstanding principal amount of
$1,000,000 at any time;
provided, however, notwithstanding the foregoing provisions of this (S)12.1, the
- -------- -------
total principal amount of all Indebtedness outstanding under clause (q) of this
(S)12.1 shall not at any time exceed an aggregate principal amount outstanding
of $2,000,000 and the total principal amount of all Indebtedness outstanding
under clause (r) of this (S)12.1 shall not at any time exceed an aggregate
principal amount outstanding of $2,000,000 unless the Total Expansion Commitment
then in effect has been permanently reduced on a dollar for dollar basis by the
amount of such Indebtedness which is in excess of such limits.
12.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit any of
----------------------
its Subsidiaries to, create or incur or suffer to be created or incurred or to
exist any Lien; provided that the Borrower and any Subsidiary of the Borrower
--------
may create or incur or suffer to be created or incurred or to exist:
(a) Liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of
the Borrower to the Borrower;
(b) Liens to secure taxes, assessments and other government charges or
liens on properties to secure claims for labor, material or supplies to the
extent that payment therefor shall not at the time be required to be made in
accordance with the provisions of (S)11.8;
(c) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or other
social security obligations;
(d) Liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by (S)12.1(d);
<PAGE>
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(e) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens on properties to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of
(S)11.8;
(f) encumbrances on Real Estate consisting of leases, licenses,
easements, rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrower or a Subsidiary of the
Borrower is a party, and other minor liens or encumbrances none of which in
the opinion of the Borrower interferes materially with the use of the property
affected in the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or of
the Borrower and its Subsidiaries on a consolidated basis;
(g) Liens existing on the date hereof and listed on Schedule 12.2
-------- ----
hereto;
(h) subject to the limitation set forth in (S)4.4.1 hereof, purchase
money security interests in or purchase money liens on real or personal
property other than Mortgaged Properties acquired after the date hereof to
secure purchase money Indebtedness of the type and amount permitted by
(S)12.1(q), incurred in connection with the acquisition of such property,
which security interests or liens cover only the real or personal property so
acquired; provided, however, to the extent all or any portion of such
-------- -------
Indebtedness is in excess of the aggregate outstanding principal amount of
$2,000,000 at any time, such security interest and/or lien shall be
subordinated to the liens and security interests of the Agent on terms
acceptable to the Agent, and such liens shall only be permitted to be incurred
to the extent no Default or Event of Default has occurred and is continuing or
would exist as a result of such incurrence;
(i) subject to the limitation set forth in (S)4.4.1 hereof, security
interests in or liens on Capital Assets acquired after the date hereof to
secure the Indebtedness of the type and amount permitted by (S)12.1(r),
incurred in connection with the acquisition of such property, which security
interests or liens cover only all or any portion of the Capital Asset so
acquired, and such liens shall only be permitted to the incurred to the extent
no Default or Event of Default has occurred and is continuing or would exist
as a result of such incurrence;
(j) Liens on each Mortgaged Property as and to the extent permitted by
the Mortgage applicable thereto;
(k) interests of lessors under leases permitted by (S)12.1(g) or
(S)13.7;
(l) Liens in favor of the Agent for the benefit of the Banks and the
Agent under the Loan Documents;
<PAGE>
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(m) Liens securing refinancing Indebtedness permitted under (S)12.1(r)
hereof, but only to the extent that the Indebtedness so refinanced was
secured, and only covering assets which secured the Indebtedness being
refinanced;
(n) Liens to secure the performance of tenders, bids, surety or
performance bonds and other similar obligations incurred in the ordinary
course of business consistent with past practices;
(o) Liens in respect of any transfer of certain credit card receivables
solely for the purpose of facilitating collection on behalf of the Borrower
and for the Borrower's account on such receivables;
(p) Liens in respect of fuel swaps and other hedging arrangements as
permitted by (S)12.1(l) hereof; and
(q) interest of lessees under leases.
12.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not permit
---------------------------
any of its Subsidiaries to, make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase by the
Borrower and repurchase obligations in respect thereof having a term of not
more than thirty (30) days entered into with any United States bank having
assets in excess of $1,000,000,000;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of (i) United States banks having total assets in excess of
$1,000,000,000 or (ii) United States banks having total assets of less than
$1,000,000,000 as long as such Investments do not remain in such banks for
more than seven (7) days in amounts in excess of FDIC insurance coverage and
do not exceed $500,000 per bank in the aggregate at any time;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than "P 2" if rated by Moody's Investors
Services, Inc., or not less than "A 2" if rated by Standard and Poor's Ratings
Group;
(d) Investments existing on the date hereof and listed on Schedule 12.3
-------- ----
hereto;
(e) Investments with respect to Indebtedness permitted by (S)12.1(i) and
(j) so long as such entities remain Subsidiaries of the Borrower and such
Investments are evidenced by intercompany notes which are satisfactory to the
Banks, payable to the order of the Borrower and pledged to the Agent for the
benefit of the Banks in the manner provided in (S)12.1(i);
<PAGE>
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(f) Investments consisting of the Guaranty, or Investments by the
Borrower in Subsidiaries of the Borrower existing on the Closing Date, or
Investments with respect to Indebtedness permitted by (S)12.1(o), Investments
by Petro Distributing or Petro Financial in respect of the Old Notes and
Investments by Petro Distributing, Petro Financial or any other Subsidiary in
respect of the New Notes;
(g) Investments consisting of noncash proceeds of asset dispositions
permitted by (S)12.5.2;
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $750,000 in the aggregate at any time
outstanding;
(i) shares of any so-called "money market fund" provided, that such
--------
fund is registered under the Investment Company Act of 1940, has net assets in
excess of $100,000,000, has an investment portfolio with an average maturity
of 365 days or less, and invests substantially all of its assets in
Investments of the types listed in clauses (a), (b) and (c) above;
(j) Investments consisting of Capital Expenditures permitted under
(S)13.5;
(k) Investments in respect of fuel price swaps, fuel price caps, fuel
price collars and fuel price floors and similar agreements and hedging
obligations and arrangements incurred in the ordinary course of business
consistent with past practices (but only to the extent done to protect against
or manage the Borrower or any Subsidiary to exposure to fluctuations in fuel
prices and not for speculative purposes);
(l) Investments received in settlement of obligations owed to the
Borrower or any of its Subsidiaries or as a result of bankruptcy or insolvency
proceedings or upon foreclosure or enforcement of any lien in favor of the
Borrower or any Subsidiary;
(m) Investments by the Borrower or any of its Subsidiaries not
otherwise permitted hereunder, provided the aggregate amount of all such
outstanding Investments does not exceed $5,000,000 plus, to the extent the
----
Borrower would be permitted to make a Distribution pursuant to (S)12.4(c), the
amount the Borrower would be permitted to make pursuant to (S)12.4(c) and did
not otherwise make as a Distribution pursuant thereto;
(n) Investments by the Borrower or any of its Subsidiaries in either
Wholly-Owned Subsidiaries or Non-Wholly Owned Subsidiaries; provided such
--------
Subsidiary has guaranteed all the Obligations of the Borrower hereunder
pursuant to a guaranty in form and substance satisfactory to the Agent and has
granted to the Agent a first priority perfected security interest in all of
its assets (subject only to Permitted Liens) to secure such Obligations
pursuant to documents and agreements in form and substance satisfactory to the
Agent;
<PAGE>
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(o) Investments in respect of interest rate swaps, caps, collars and
similar agreements and fuel swaps permitted hereunder; and
(p) Investments by the Borrower in respect of the purchase by the
Borrower of the Capital Interests of any Person, so long as (i) such an
acquisition is permitted by (S)12.5.1 hereof; (ii) such Person shall become a
Wholly-Owned Subsidiary or Non-Wholly Owned Subsidiary, and (iii) the Loan
Document shall be amended and/or supplemented as necessary to make the terms
and conditions of the Loan Documents applicable to such new Subsidiary.
12.4. DISTRIBUTIONS. The Borrower will not make any Distributions other than
--------------
Tax Distributions; provided, however, (a) with respect to paragraphs (a) and (c)
below, so long as no Default or Event of Default has occurred and is continuing
or would exist as a result thereof, and (b) with respect to paragraph (b) below,
so long as no Event of Default pursuant to (S)16.1(a) or (b) has occurred and is
continuing or would exist as a result thereof, the Borrower shall be permitted
to make the following:
(a) Additional Tax Distributions; provided that the Borrower shall
--------
deliver a certificate signed by an officer of the Borrower setting forth the
calculation of taxable income and the related Additional Tax Distribution;
(b) any payment to an Affiliate in a transaction permitted by
(S)12.9(c); and
(c) so long as the Borrower has demonstrated to the reasonable
satisfaction of the Agent that the Leverage Ratio both before and after giving
effect to the proposed Distribution is not greater than 3.00:1.00, the
Borrower shall be permitted to make Distributions on the Borrower's preferred
limited partnership interests or preferred stock issued in exchange thereof in
an amount not to exceed, in the aggregate, two times the liquidation
preference on the test date multiplied by the preferred return rate for the
next year in any fiscal year less the amount of Investments made by the
----
Borrower in such period pursuant to (S)12.3(m) in excess of $5,000,000.
12.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
-----------------------------------------------
12.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and will not
------------------------
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any acquisition of all or substantially
all the assets of any Person or any operating unit of any Person or stock
acquisition other than (a) the merger of the Borrower with another Person
solely to effect a conversion of the Borrower to a corporate entity; (b) the
acquisition of assets in the ordinary course of business consistent with past
practices; (c) the Permitted Financed Acquisitions; (d) other asset or stock
acquisitions of Persons in the same or a similar line of business as the
Borrower or its Subsidiary (the "Other Permitted Acquisitions", and,
collectively with the acquisitions permitted by paragraphs (a), (b) and (c)
hereof, the "Permitted Acquisitions") where (i) the Borrower has provided the
Agent with five (5) Business Days prior written notice of such Other Permitted
Acquisition, which notice shall include a reasonably detailed
<PAGE>
-83-
description of such Other Permitted Acquisition and the documents, agreements
and instruments to be entered into in connection with such Other Permitted
Acquisition; (ii) the business to be acquired would not subject the Banks or
the Agent to regulatory or third party approvals in connection with the
exercise of their rights and remedies under this Credit Agreement or any other
Loan Documents; (iii) the business and assets so acquired shall be acquired by
the Borrower or such Subsidiary free and clear of all liens (other than as
permitted by (S)12.2 hereof) and all Indebtedness (other than as permitted by
(S)12.1 hereof); (iv) the Borrower or such Subsidiary has taken all necessary
actions to grant to the Agent a first priority perfected lien on all assets
and stock to be acquired in connection with such Other Permitted Acquisition
(other than Permitted Liens) and, to the extent applicable, has provided the
Agent with all documents, agreements and information required pursuant to
(S)11.14 hereof; (v) the Borrower has demonstrated to the reasonable
satisfaction of the Agent, based on a pro forma Compliance Certificate,
--- -----
compliance with (S)13 hereof on a Pro Forma Basis immediately prior to and
after giving effect to such Other Permitted Acquisition; and (vi) no Default
or Event of Default has occurred and is continuing or would exist as a result
of giving effect to such Other Permitted Acquisition; (e) the merger or
consolidation of one or more of the Subsidiaries of the Borrower with and into
the Borrower, or (f) the merger or consolidation of two or more Subsidiaries
of the Borrower. In addition, in the event any new Subsidiary is formed as a
result of or in connection with any acquisition, the Loan Documents shall be
amended and/or supplemented as necessary to make the terms and conditions of
the Loan Documents applicable to such new Subsidiary as a guarantor of the
Obligations.
12.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will not
---------------------
permit any of its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than (a) the disposition of assets in the
ordinary course of business, consistent with past practices or the transfer of
assets from any Subsidiary to the Borrower; (b) the contribution by the
Borrower of assets to any joint venture to the extent such an Investment is
permitted pursuant to (S)12.3(m); (c) to the extent such a transaction would
be considered a disposition of assets, the execution and delivery by the
Borrower or any of its Subsidiaries of any ground lease on any Real Estate
with any Person in an arms-length transaction for fair and reasonable value;
(d) the sale or other disposition by the Borrower or any of its Subsidiaries
of any Undeveloped Land to any Person other than a Subsidiary in an arms-
length transaction for fair and reasonable value; (e) other dispositions of
assets other than Asset Swaps to any Person in an arms-length transaction for
fair and reasonable value in an aggregate amount not to exceed $10,000,000
during the term of this Credit Agreement; (f) Asset Swaps to any unaffiliated
third parties in an arms-length transaction for fair and reasonable value in
an aggregate amount not to exceed $20,000,000 during the term of this Credit
Agreement, provided that (i) the acquisition by the Borrower or such
--------
Subsidiary of the asset to be acquired pursuant to any Asset Swap is permitted
pursuant to (S)12.5.1 hereof, (ii) to the extent the asset to be acquired is a
Stopping Center, the Borrower or such Subsidiary has complied with all the
covenants and
<PAGE>
-84-
requirements contained herein as if such acquisition was a Permitted Financed
Acquisition; (iii) to the extent the asset to be acquired is anything other
than a Stopping Center, the Borrower or such Subsidiary, as the case may be,
has complied with all the covenants and requirements contained herein as if
such acquisition was an Other Permitted Acquisition; and (iv) such Asset Swap
is also considered an "Asset Swap" pursuant to the New Notes Indenture and
shall not be subject to the requirement of (S)4.9(a)(ii) of the Indenture; and
(g) dispositions in connection with fuel price swaps in the ordinary course of
business; provided, that, prior to making any dispositions set forth in this
--------
(S)12.5.2, the Borrower shall have delivered to the Agent on the date of any
such sale or disposition a certificate signed by an authorized officer of the
Borrower and evidence satisfactory to the Agent showing that (i) no Default or
Event of Default has occurred and is continuing at the time of such sale or
disposition and no such Default or Event of Default will exist after giving
effect to such sale; (ii) if the net proceeds of each such sale (or a series
of related sales) exceeds, in the aggregate, $500,000, at least eighty-five
percent (85%) of the purchase price for such assets is received in cash;
provided, however, any Asset Swap entered into by the Borrower or any
-------- -------
Subsidiary which is permitted hereunder and entered into in the ordinary
course of business shall not be subject to this clause (ii); (iii) the
Borrower or such Subsidiary, as applicable, has delivered any promissory note
or other instrument received by the Borrower or such Subsidiary in connection
with such sale or disposition to the Agent to be held in pledge for the
benefit of itself and the Banks in accordance with the terms of the Loan
Documents; and (iv) the net cash proceeds received from any such sales or
dispositions shall be applied in the manner and at the times as are required
by (S)4.4.1. hereof. In addition, in the event the Borrower or any Subsidiary
effects the sale of any assets pursuant to this (S)12.5.2 to any Person other
than a Subsidiary of the Borrower, simultaneously with such disposition the
Borrower shall deliver to the Agent a written notice of such disposition,
together with a written notification to the Agent setting forth the amount of
cash proceeds received by the Borrower from such disposition, and the
Borrower's election as to which type of Capital Expenditure limitation set
forth in (S)13.5 shall be increased for the next twelve (12) months
immediately following such disposition by the amount of such cash proceeds
received for such sale. If the Borrower fails to make such an election, New
Site Capital Expenditures shall be increased for such twelve month period by
the amount of such cash proceeds so received.
Notwithstanding anything to the contrary contained in this (S)12.5.2, (A)
the Borrower and its Subsidiaries shall not be permitted to dispose of any
assets or take (or omit to take) any action in connection with any asset sale
or other disposition or engage in any other transaction which action (or
omission) would require any repayment, repurchase or redemption (or any
mandatory offer to repay, repurchase or redeem) by the Borrower or any of its
Subsidiaries of the New Notes pursuant to (S)4.9 of the New Notes Indenture
prior to the repayment in full of all the Obligations, or would violate the
provisions of (S)4.9 of the New Notes Indenture; (B) the Borrower shall not
directly or indirectly sell or otherwise dispose of all or substantially all
of its assets; and (C) except as
<PAGE>
-85-
expressly permitted in this (S)12.5.2, neither the Borrower nor its
Subsidiaries shall sell or otherwise dispose of any capital stock of any
Person which is either the Borrower or a Guarantor or is an entity the capital
stock of which is pledged under the Loan Documents by the Borrower or any
Guarantor, except for transfers to the Borrower or another Guarantor (with
each such transfer to a the Borrower or another Guarantor to be subject to the
Agent's security interest therein for the benefit of the Agent and the Banks).
12.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any of
------------------
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that the Borrower or any Subsidiary of the Borrower intends to
use for substantially the same purpose as the property being sold or
transferred.
12.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and will not
----------------------------------
permit any of its Subsidiaries to, (a) use any of the Real Estate or any portion
thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate, in each case (a) through (e), in any manner that would violate any
Environmental Law in any material respect or bring such Real Estate in material
violation of any Environmental Law.
12.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA Affiliate
----------------------
will
(a) engage in any "prohibited transaction" within the meaning of (S)406
of ERISA or (S)4975 of the Code which could result in a material liability for
the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated funding
deficiency", as such term is defined in (S)302 of ERISA, whether or not such
deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower or any of its Subsidiaries pursuant to (S)302(f) or (S)4068 of ERISA;
or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S)4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this
<PAGE>
-86-
purpose the benefit liabilities and assets of any such Plan with assets in
excess of benefit liabilities.
12.9. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not allow
----------------------------
its Subsidiaries to, engage in transactions with its Affiliates except for (a)
transactions with Affiliates entered into on or prior to the Closing Date and
described on Schedule 12.9 hereto, (b) transactions which are on terms no less
-------- ----
favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary could obtain in arms-length transactions from third parties which are
not Affiliates, (c) transactions involving the payment by the Borrower and its
Subsidiaries of a management fee to Chartwell Investments, Inc. and Mobil Oil
Corporation in the aggregate not to exceed $1,200,000 during any fiscal year,
provided, that in each case any such fees may accrue but shall not be paid by
- --------
the Borrower or any Subsidiary at any time after the occurrence and during the
continuance of an Event of Default pursuant to (S)16.1(a) or (b) hereof, until
such Event of Default is cured, whereupon such accrued and unpaid fees may be
paid, (d) the payment of reasonable and customary fees for services as directors
and attendance at meetings consistent with the Borrower's past practice, to
directors of the Borrower or its Subsidiaries who are not employees of the
Borrower or its Subsidiaries, and (e) Distributions to the extent permitted by
(S)12.4 hereof.
12.10. NO CHANGES TO OLD NOTES AND NEW NOTES. The Borrower will not amend any
-------------------------------------
provisions of the Old Notes, the Indenture, the Warrants, the New Notes or the
New Notes Indenture without the prior written consent of the Majority Banks
except for amendments which are permitted to be effected by the Trustee without
the consent of the holders thereof.
12.11. FISCAL YEAR. The Borrower will not change the date of the end of its
-----------
fiscal year from that referred to in (S)10.22 hereof.
12.12. NO NEGATIVE PLEDGES. The Borrower will not, and will not permit any of
-------------------
its Subsidiaries to enter into, any agreement (excluding this Credit Agreement,
the other Loan Documents, the New Notes and the New Notes Indenture) prohibiting
the creation or assumption of any lien upon its properties, revenues or assets
or those of any of its Subsidiaries, whether now owned or hereafter acquired
other than agreements with Persons prohibiting any such lien on assets in which
such Person has a prior security interest which is permitted by (S)12.2.
12.13. UPSTREAM LIMITATIONS. The Borrower will not, nor will the Borrower
--------------------
permit any of its Subsidiaries to enter into any agreement, contract or
arrangement (other than the Credit Agreement and the other Loan Documents)
restricting the ability of any Subsidiary to pay or make dividends or
distributions in cash or kind to the Borrower or to any Subsidiary, to make
loans, advances or other payments of whatsoever nature to the Borrower or to any
Subsidiary or to make transfer or distributions of all or any part of its assets
to the Borrower or to any Subsidiary of such Subsidiary.
12.14. INCONSISTENT AGREEMENTS. The Borrower will not, nor will it permit any
-----------------------
of its Subsidiaries to, enter into any agreement containing any provision which
would be
<PAGE>
-87-
violated or breached by the performance by the Borrower or such Subsidiary of
its obligations hereunder or under any of the Loan Documents.
12.15. UNDEVELOPED LAND. The Borrower will not, and will not permit any of its
----------------
Subsidiaries, to own Undeveloped Land acquired by the Borrower or any of its
Subsidiaries at any time after the Closing Date to the extent that the value of
all such Undeveloped Land (which value shall be determined based upon the
respective purchase price for each property so acquired) exceeds $3,000,000 in
the aggregate; provided, however, for purposes of this (S)12.15, any Undeveloped
-------- -------
Land acquired by the Borrower or any of its Subsidiaries at any time after the
Closing Date with the proceeds received by the Borrower or such Subsidiary from
a disposition of Undeveloped Land owned prior to the Closing Date shall not be
included in the valuation for purposes of compliance with this (S)12.15.
13. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Agent has any obligation to issue,
extend or renew any Letters of Credit:
13.1. MAXIMUM CONSOLIDATED LEVERAGE RATIO. The ratio of Consolidated Funded
-----------------------------------
Indebtedness on the last day of any fiscal quarter (or at any date when
computing Consolidated Funded Indebtedness on a Pro Forma Basis) during a period
set forth below (the "Determination Date") to Consolidated EBITDA for the period
of four (4) consecutive fiscal quarters ended on or most recently before such
Determination Date shall not exceed, at any time during the periods set forth
below, the ratio set forth opposite the applicable period set forth in the table
below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------
PERIOD RATIO
------ -----
-----------------------------------------------------------------
<S> <C>
-----------------------------------------------------------------
06/30/97 through 09/29/97 6.50:1.00
-----------------------------------------------------------------
09/30/97 through 12/30/97 6.25:1.00
-----------------------------------------------------------------
12/31/97 through 12/30/98 5.95:1.00
-----------------------------------------------------------------
12/31/98 through 12/30/99 5.75:1.00
-----------------------------------------------------------------
12/31/99 through 12/30/00 4.85:1.00
-----------------------------------------------------------------
12/31/00 through 12/30/01 4.25:1.00
-----------------------------------------------------------------
12/31/01 through 12/30/02 3.75:1.00
-----------------------------------------------------------------
12/31/02 through 12/30/03 3.50:1.00
-----------------------------------------------------------------
Thereafter 3.25:1.00
-----------------------------------------------------------------
</TABLE>
provided, however, for purposes of this (S)13.1 until such time as the Borrower
- -------- -------
and its Subsidiaries have made New Site Capital Expenditures of at least
$10,000,000 in the aggregate, Consolidated Funded Indebtedness shall be reduced
by the amount of the Borrower's cash in excess of $3,000,000, up to an aggregate
amount of $10,000,000 (the "Excess Amount").
13.2. MINIMUM NET WORTH. The Borrower will not permit Consolidated Net Worth
-----------------
at the end of any fiscal year to be less than the sum of (a) the Consolidated
Net
<PAGE>
-88-
Worth reported in the Borrower's financial statements as of the Closing Date
(after giving effect to all closing adjustments) less $10,000,000, plus (b) on a
---- ----
cumulative basis, fifty percent (50%) of positive consolidated net income for
each fiscal year, determined in accordance with generally accepted accounting
principles, beginning with the fiscal year ending December 31, 1997 plus (c)
----
accrued dividends paid in additional Capital Interests less Distributions paid
----
pursuant to (S)12.4(c) hereof; provided, however, in the event accounting
--------- --------
adjustments resulting from the Recapitalization or the other transactions
contemplated by this Credit Agreement and the other Loan Documents result in
certain non-cash charges to Consolidated Net Income not otherwise anticipated in
the underlying assumptions of the Borrower's financial projections prepared and
delivered to the Agent and the Banks on or prior to the Closing Date, the
Borrower, the Agent and the Banks agree to negotiate in good faith a
modification to subparagraph (b) hereof to take into account the impact on
Consolidated Net Income due to such non-cash charges not otherwise anticipated.
13.3. CONSOLIDATED CASH FLOW RATIO. The ratio of Consolidated Cash Flow for
-----------------------------
the period consisting of the four (4) consecutive fiscal quarters ending on the
last day of any fiscal quarter set forth in the table below to Consolidated
Financial Obligations for such period shall not be less than the amount set
forth below in such table opposite such date:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
FISCAL QUARTER ENDING RATIO
--------------------- -----
<S> <C>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
12/31/97 through 12/30/98 1.15:1.00
- ----------------------------------------------------------------------
12/31/98 through 12/30/99 1.20:1.00
- ----------------------------------------------------------------------
12/31/99 through 12/30/00 1.20:1.00
- ----------------------------------------------------------------------
12/31/00 through 12/30/01 1.20:1.00
- ----------------------------------------------------------------------
12/31/01 through 12/30/02 1.20:1.00
- ----------------------------------------------------------------------
Thereafter 1.25:1.00
- ----------------------------------------------------------------------
</TABLE>
provided, however, for purposes of this (S)13.3 until such time as the Borrower
- -------- -------
and its Subsidiaries have made New Site Capital Expenditures of at least
$10,000,000 in the aggregate, Consolidated Cash Interest Expense shall be
reduced by interest on the Excess Amount for the period tested at an assumed
rate of 10.5% per annum.
13.4. CONSOLIDATED EBITDA/INTEREST. The ratio of Consolidated EBITDA for the
-----------------------------
period consisting of the four (4) consecutive fiscal quarters ending on the last
day of any fiscal quarter set forth in the table below to Consolidated Cash
Interest Expense for such period shall not be less than the amounts set forth
below in such table opposite such date:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
FISCAL QUARTER ENDING RATIO
--------------------- -----
<S> <C>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
06/30/97 through 12/30/97 1.40:1.00
- ----------------------------------------------------------------------
12/31/97 through 12/30/98 1.50:1.00
- ----------------------------------------------------------------------
12/31/98 through 12/30/99 1.65:1.00
- ----------------------------------------------------------------------
12/31/99 through 12/30/00 1.90:1.00
- ----------------------------------------------------------------------
12/31/00 through 12/30/01 2.05:1.00
- ----------------------------------------------------------------------
Thereafter 2.25:1.00
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
-89-
provided, however, for purposes of this (S)13.4 until such time as the Borrower
- -------- -------
and its Subsidiaries have made New Site Capital Expenditures of at least
$10,000,000 in the aggregate, Consolidated Cash Interest Expense shall be
reduced by interest on the Excess Amount for the period tested at an assumed
rate of 10.5% per annum.
13.5. CONSOLIDATED CAPITAL EXPENDITURES. The Borrower shall not permit the
---------------------------------
aggregate amount of Maintenance Capital Expenditures, Improvement Capital
Expenditures and New Site Capital Expenditures for itself and its Subsidiaries
during the periods set forth below to be greater than the amounts opposite such
periods:
<TABLE>
<CAPTION>
============================================================================
PERIOD AMOUNT AMOUNT AMOUNT
- ------ ------ ------ ------
============================================================================
Maintenance Improvement New Site
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Closing Date $4,300,000 $5,200,000 $ 8,700,000
through Fiscal
Year end 1997
- ----------------------------------------------------------------------------
Fiscal year 1998 $4,300,000 $3,600,000 $25,600,000
- ----------------------------------------------------------------------------
Fiscal year 1999 $4,300,000 $1,300,000 $11,600,000
- ----------------------------------------------------------------------------
Fiscal year 2000 $4,300,000 $0 $3,900,000
- ----------------------------------------------------------------------------
Fiscal year 2001 $4,300,000 $0 $1,300,000
- ----------------------------------------------------------------------------
Fiscal Years Thereafter $4,300,000 $0 $1,300,000
- ----------------------------------------------------------------------------
</TABLE>
Capital Expenditures not spent in a given year may be carried over and added
to the applicable basket only for the immediately following year (after first
utilizing the amount of Capital Expenditures permitted for such fiscal year),
each such carry over not to exceed one year. The unused portion of Maintenance
Capital Expenditures for any fiscal year may be added to the aggregate amount of
permitted Improvement Capital Expenditures or New Site Capital Expenditures for
the same year, but not for any subsequent year. In addition, in the event the
Borrower or any Subsidiary disposes of any assets in accordance with (S)12.5.2
hereof, the amount of the cash proceeds received by the Borrower or such
Subsidiary from such disposition shall increase the amount of the permitted
Capital Expenditures as set forth in (S)12.5.2 for the twelve month period
immediately following the date in which such disposition occurred, and shall be
deemed to be the first portion of such Capital Expenditures utilized for such
period.
13.6. OPERATING INCOME. The Borrower will not permit Consolidated Operating
----------------
Income for the three (3) month period ending April 30, 1997 to be less than $0.
13.7. OPERATING LEASES. The Borrower will not, and will not permit any of its
----------------
Subsidiaries to, as lessee, enter into, permit to exist, or renew any agreements
to rent or lease any real or personal property if the annual rental expenses
(determined in accordance with generally accepted accounting principles) and
(without duplication) the Rental Obligations then due and payable of the
Borrower and its Subsidiaries (on a consolidated basis) under any rental
agreements or leases of real or personal property (other than Capitalized
Leases) exceeds $4,000,000 in any fiscal year.
<PAGE>
-90-
14. CLOSING CONDITIONS.
------------------
The obligations of the Banks to make the initial Revolving Credit Loans and
the Term Loans and of the Agent to issue any initial Letters of Credit shall be
subject to the satisfaction of the following conditions precedent:
14.1. LOAN DOCUMENTS, ETC.
-------------------
14.1.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been
--------------
duly executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory to each
of the Banks. Each Bank shall have received a fully executed copy of each such
document.
14.1.2. RECAPITALIZATION DOCUMENTS. Each of the Recapitalization
--------------------------
Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form and
substance satisfactory to each of the Banks. The Agent shall have received a
fully executed copy of each such document.
14.1.3. NEW NOTES. Each of the New Notes and the New Notes Indenture
---------
shall have been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to each of the Banks. Each Bank shall have received a copy of
each such fully executed document.
14.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall have
-------------------------------------
received (a) from the Borrower a copy, certified by a duly authorized officer
of such Person to be true and complete on the Closing Date, of each of its
partnership certificate and partnership agreement as in effect on such date of
certification, and (b) from Petro Financial and the general partners of the
Borrower, a copy, certified by a duly authorized officer of such Person to be
true and complete on the Closing Date, of its charter or other incorporation
documents and its by-laws as in effect on such date of certification.
14.3. ACTION. All corporate and partnership action necessary for the valid
------
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
14.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from the
----------------------
Borrower and each of its Subsidiaries an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower or such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests and Conversion Requests
<PAGE>
-91-
and to apply for Letters of Credit; and (c) to give notices and to take other
action on its behalf under the Loan Documents.
14.5. VALIDITY OF LIENS. The Security Documents shall be effective to create
-----------------
and continue in favor of the Agent a legal, valid and enforceable first (except
for Permitted Liens entitled to priority under applicable law) security interest
in and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the Agent
to protect and preserve such security interests shall have been duly effected,
or provision satisfactory to the Agent for such filings, recordings and other
actions shall have been made. The Agent shall have received evidence thereof in
form and substance satisfactory to the Agent.
14.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall have
----------------------------------------------
received from each of the Borrower and its Subsidiaries a completed and fully
executed Perfection Certificate and the results of UCC searches with respect to
the Collateral, indicating no liens other than Permitted Liens (and liens to be
discharged on the Closing Date pursuant to (S)12.16) and otherwise in form and
substance satisfactory to the Agent.
14.7. SURVEY AND TAXES. The Agent shall have received as to each Mortgaged
----------------
Property on which a Mortgage is granted on the Closing Date, (a) a Survey of
each such Mortgaged Property together with a Surveyor Certificate relating
thereto and (b) evidence of payment of real estate taxes and municipal charges
on all Real Estate not delinquent on or before the Closing Date.
14.8. TITLE INSURANCE. The Agent shall have received (a) as to each Mortgaged
---------------
Property on which a Mortgage is granted on the Closing Date, a Title Policy
covering each such Mortgaged Property (or commitments to issue such policies,
with all conditions to issuance of the Title Policy deleted by an authorized
agent of the Title Insurance Company); (b) as to each Mortgaged Property on
which a Mortgage was granted prior to the Closing Date, a Title Policy
endorsement covering each of the Mortgaged Properties for which a Title Policy
was previously delivered, together with proof of payment of all fees and
premiums for such policies and endorsements, from the Title Insurance Company
and in amounts satisfactory to the Agent, insuring the interest of the Agent and
each of the Banks as mortgagee under the Mortgages or (c) other evidence that
the Borrower or its Subsidiaries has good title to the Mortgaged Property, which
evidence shall be satisfactory to the Agent.
14.9. LANDLORD CONSENTS. The Borrower and its Subsidiaries shall have
-----------------
delivered to the Agent all consents required for the Agent to receive, as part
of the Security Documents, a collateral assignment of each material leasehold of
personal property, and a mortgage of each material leasehold of real property
included in the Collateral, together in each case with such estoppel
certificates as the Agent may request.
14.10. CERTIFICATES OF INSURANCE. The Agent shall have received (a) a
-------------------------
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
Schedule 10.26 hereto
- --------------
<PAGE>
-92-
and the provisions of the Security Agreements and (b) certified copies of all
policies evidencing such insurance (or certificates therefor signed by the
insurer or an agent authorized to bind the insurer).
14.11. APPRAISALS. The Agent shall have received appraisals from appraisers
----------
and in form and substance satisfactory to the Agent and in compliance with
applicable laws, covering all of its Mortgaged Property which appraisals shall
indicate that the appraised value of such Mortgaged Property is not materially
lower, in the aggregate, than the aggregate value of such Mortgaged Property
estimated and disclosed to the Agent by the Borrower on the basis of prior
appraisals.
14.12. HAZARDOUS WASTE ASSESSMENTS. The Agent shall have received hazardous
---------------------------
waste site assessments or updates of previous such site assessments from
environmental engineers and in form and substance satisfactory to the Agent,
covering all Real Estate and all other real property in respect of which the
Borrower or any of its Subsidiaries may have material liability, whether
contingent or otherwise, for dumping or disposal of Hazardous Substances.
14.13. SOLVENCY OPINION. The Agent shall have received a copy of an opinion
----------------
from Valuation Research, Inc. dated not more than fourteen (14) days prior to
the Closing Date, describing in detail the solvency of the Borrower and its
Subsidiaries on a consolidated basis after the consummation of the transactions
contemplated herein and in form and substance satisfactory to the Banks.
14.14. OPINIONS OF COUNSEL. Each of the Banks and the Agent shall have
-------------------
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from:
(a) Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the Borrower
and its Subsidiaries; and
(b) local counsel to the Borrower and its Subsidiaries in all states
where any of the Mortgaged Property for which a Mortgage is being granted on
the Closing Date is located.
14.15. PAYMENT OF FEES. The Borrower shall have paid to the Banks or the
---------------
Agent, as appropriate, the commitment fee, the Agent's fee and the closing fee
pursuant to (S)(S)2.2, 8.1.1 and 8.1.2.
14.16. COMMERCIAL FINANCE EXAMINATION. The Agent's commercial finance
------------------------------
examiners shall have completed a review of the Borrower's books and records and
concluded that the results of such review are satisfactory.
14.17. TENDER AND CONSENT UNDER INDENTURE. The Agent shall have received
----------------------------------
evidence satisfactory to the Agent that (a) the Borrower and Petro Distributing
have received the consent of holders holding not less than 75.1% of the
aggregate outstanding principal amount of the Old Notes and Warrants to amend
the Indenture relating to the Old Notes on terms set forth in the Indenture
Tender Offer, and that the consents granted thereunder and such amendments are
effective and (b) holders holding not less
<PAGE>
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than 75% of the aggregate outstanding principal amount of the Old Notes have
tendered such Old Notes to Petro Holdings GP and/or the Borrower prior to or on
the Closing Date on the terms set forth in the Indenture Tender Offer.
14.18. NEW NOTES. The Agent shall have received evidence satisfactory to the
---------
Agent that the New Notes have been issued in accordance with the terms of the
New Notes Indenture in an aggregate amount of not more than $135,000,000 and the
Borrower has received the proceeds of such issuance in cash.
14.19. SATISFACTION OF CONDITIONS OF RECAPITALIZATION DOCUMENTS. The Agent
--------------------------------------------------------
shall have received evidence that all of the closing conditions in the
Recapitalization Documents have been satisfied without recourse to any provision
permitting the waiver by any party thereto of any condition, obligation,
covenant or other requirement.
14.20. COMPLETION OF RECAPITALIZATION. The Recapitalization shall have been
------------------------------
completed pursuant to the Recapitalization Documents and otherwise on terms and
conditions that are satisfactory to the Agent in all respects.
14.21. NO MATERIAL ADVERSE CHANGE. The Agent and the Banks shall be satisfied
--------------------------
that no material adverse change (including, without limitation, the failure of
James A. Cardwell, Sr. to be the chief executive officer of the Borrower on the
Closing Date) in the business, assets, arrangements or financial condition,
income or prospects of the Borrower has occurred prior to the Closing Date.
14.22. CAPITALIZATION. The Agent and the Banks shall have received evidence
--------------
satisfactory to the Agent and the Banks that the Sponsors have invested at least
$59,600,000 in general and limited partnership interests of the Borrower and
preferred limited partnership interests of the Borrower on terms satisfactory to
the Banks and the Agent, and that payments to the Selling Partners have been
made strictly in accordance with the terms of the IPA.
14.23. TRANSACTION COSTS. The aggregate amount of transaction costs associated
-----------------
with this transaction and the Recapitalization (including, without limitation,
consent solicitation fees and expenses) shall not exceed an aggregate amount
approved by the Agent.
14.24. CONSENTS AND APPROVALS. The Agent shall have received evidence that all
----------------------
consents and approvals necessary to complete the Recapitalization and the
transactions contemplated hereby have been obtained.
14.25. PRO FORMA BALANCE SHEET. The Agent shall have received a satisfactory
-----------------------
pro forma balance sheet as of the Balance Sheet Date.
15. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Loan, including the Revolving Credit
Loan, the Term Loans and any Advance and of the Agent to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
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15.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the representations
-----------------------------------------
and warranties of any of the Borrower and its Subsidiaries contained in this
Credit Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Credit Agreement shall be true
as of the date as of which they were made and shall also be true at and as of
the time of the making of such Loan or the issuance, extension or renewal of
such Letter of Credit, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing. The Agent shall have received a
certificate of the Borrower signed by an authorized officer of the Borrower to
such effect.
15.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
-------------------
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Agent would make it illegal for the Agent to
issue, extend or renew such Letter of Credit.
15.3. GOVERNMENTAL REGULATION. Each Bank shall have received such statements
-----------------------
in substance and form reasonably satisfactory to such Bank as such Bank shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
15.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
-------------------------
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
15.5. CONDITIONS TO ADVANCES AND REVOLVING CREDIT LOANS FOR PERMITTED
---------------------------------------------------------------
FINANCED ACQUISITIONS.
- ---------------------
15.5.1. ACQUISITION DOCUMENTS. The Agent shall have received not less
---------------------
than five (5) Business Days prior to the Permitted Acquisition Closing Date
(a) written notification of the Permitted Financed Acquisition, together with
copies of all material documents to be entered into in connection with each
such Permitted Financed Acquisition (including, without limitation,
environmental site assessments, appraisals, title reports and surveys, if
applicable), a written statement of the purchase price for such Permitted
Financed Acquisition (which purchase price plus all transaction costs related
thereto shall not be less than the amount of the Advance or Revolving Credit
Loan requested), and shall be satisfied with the terms thereof; and (b)
evidence satisfactory to the Agent that the Borrower has demonstrated to the
reasonable satisfaction of the Agent, based on a pro forma compliance
--- -----
certificate, compliance with (S)13 hereof on a Pro
<PAGE>
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Forma Basis immediately prior to and after giving effect to such Permitted
Financed Acquisition.
15.5.2. REAL ESTATE MATTERS. The Borrower shall have delivered to the
-------------------
Agent (a) an executed Mortgage covering the Property and the Petro:Lube
Property, as the case may be, in order to give the Agent, for the benefit of
the Banks, a first priority mortgage on and security interest in the Real
Estate and related personal property, subject only to Permitted Liens, all in
form and substance satisfactory to the Agent, together with title insurance
policies, surveys, evidences of insurance with the Agent named as loss payee
and additional insured, legal opinions and other documents and certificates
with respect to such Real Estate as was required for Mortgaged Property of the
Borrower as of the Closing Date; (b) an environmental assessment report or
reports of one or more qualified environmental engineering or similar
inspection firms approved by the Agent in form, scope and substance
satisfactory to the Agent, which report or reports shall indicate a condition
of the Land in all respects satisfactory to the Agent in its sole discretion
and upon which report or reports the Agent is expressly entitled to rely; and
(c) an appraisal of such Mortgaged Property which complies in all respects
with the criteria set forth in (S)11.9.3 hereof.
15.5.3. USE OF PROCEEDS. The Agent shall have received evidence that
---------------
the Borrower has used the proceeds of each Advance and/or applicable Revolving
Credit Loan, as the case may be, requested solely to finance the purchase
price and related transaction costs of each Permitted Financed Acquisition for
which such Advance and/or Revolving Credit Loan, as the case may be, is being
requested, and the Borrower is in compliance with (S)11.12 hereof.
15.6. CONDITIONS TO ADVANCES AND REVOLVING CREDIT LOANS FOR CONSTRUCTION.
------------------------------------------------------------------
15.6.1. CONSTRUCTION DOCUMENTS. The Architects' Contract and
----------------------
Construction Contract to which such Advance and/or applicable Revolving Credit
Loan, as the case may be, pertains, shall have been duly executed and
delivered by the parties thereto, shall be in full force and effect, and the
Agent shall have received a certified copy or a fully executed counterpart
thereof. Borrower's Architect and the Contractor shall have duly executed and
delivered to the Agent a consent to the assignment of the Architect's Contract
and Construction Contract, in form of Exhibit P and Exhibit Q, and the Agent
--------- ---------
shall have received the original or a fully executed counterpart thereof.
15.6.2. SUBCONTRACTS. Upon the request of the Agent, the Borrower
------------
shall have delivered to the Agent, a list of all subcontractors and
materialmen who have been or, to the extent identified by the Borrower, will
be supplying labor or materials for the Project, a copy of the standard form
of subcontract to be used by the Contractor, and correct and complete
photocopies of all executed subcontracts and contracts.
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15.6.3. OTHER CONTRACTS. Upon the request of the Agent, the Borrower
---------------
shall have delivered to the Agent correct and complete photocopies of all
other executed contracts with contractors, engineers or consultants for the
Project, and of all development, management, brokerage, sales or leasing
agreements for the Project.
15.6.4. DELIVERIES. The following items or documents shall have been
----------
delivered to the Agent:
15.6.4.1. PLANS AND SPECIFICATIONS. A complete set of the
------------------------
Plans and Specifications and approval thereof by any necessary
governmental authority, with a certification from the Borrower's
Architect (or, if there is not a Borrower's Architect, an officer of
the Borrower responsible for the Project) that the Improvements to be
constructed comply with all requirements and governmental approvals and
that the Contractor's Contract satisfactorily provides for the
construction of the Improvements.
15.6.4.2. MORTGAGE AND TITLE INSURANCE POLICY. At the initial
-----------------------------------
Advance or Revolving Credit Loan, a duly executed Mortgage covering the
Property or Petro:Lube Property, as the case may be, in order to give
the Agent, for the benefit of the Banks, a first priority mortgage on
and security interest in the applicable Real Estate and related
personal property (subject to Permitted Liens) in form and substance
satisfactory to the Agent and the paid Title Insurance Policy with
respect to the Mortgaged Property, and at the final Advance or
Revolving Credit Loan, an updated Title Insurance Policy with respect
to the Mortgaged Property with all appropriate endorsements.
15.6.4.3. OTHER INSURANCE. Policies of all insurance required
---------------
by this Credit Agreement for such Project.
15.6.4.4. EVIDENCE OF SUFFICIENCY OF FUNDS. The Agent and
--------------------------------
each Bank shall have evidence of the Borrower's availability to acquire
the Land and complete the Project, or, in the case of a Permitted
Financed Acquisition, to complete any necessary renovations.
15.6.4.5. EVIDENCE OF ACCESS, AVAILABILITY OF UTILITIES,
---------------------------------------------
GOVERNMENTAL APPROVALS. Evidence satisfactory to the Agent as to:
----------------------
(a) the methods of access to and egress from the Property,
and nearby or adjoining public ways, meeting the reasonable
requirements of property of the type contemplated to be completed under
this Credit Agreement and the status of completion of any required
improvements to such access;
(b) the availability of storm and sanitary sewer facilities
meeting the reasonable requirements of the Property;
<PAGE>
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(c) the availability of all other required utilities, in
location and capacity sufficient to meet the reasonable needs of the
Property; and
(d) the securing of all governmental approvals from the
applicable governmental authority which are required under applicable
requirements for the construction of the Improvements, together with
copies of all such governmental approvals.
15.6.4.6. ENVIRONMENTAL REPORT. An environmental assessment
--------------------
report or reports of one or more qualified environmental engineering or
similar inspection firms approved by the Agent in form, scope and
substance satisfactory to the Agent, which report or reports shall
indicate a condition of the Land in all respects satisfactory to the
Agent in its sole discretion and upon which report or reports the Agent
is expressly entitled to rely.
15.6.4.7. SURVEY. A survey prepared by a Person satisfactory
------
to the Agent in accordance with the Agent's survey requirements,
certified by a land surveyor registered as such in the state in which
the Land is located, which survey shall be in form and substance
satisfactory to the Agent.
15.6.5. LEGAL OPINIONS. The Agent shall have received opinions in form
--------------
and substance satisfactory to the Agent and the Agent's counsel from counsel
satisfactory to the Agent in the state or states where any Project or
Petro:Lube Project is occurring and for which a Mortgage is being granted.
15.6.6. LIEN SEARCH. The Agent shall have received a certification
-----------
from the Title Company or counsel satisfactory to the Agent (which shall be
updated from time to time at the Borrower's expense upon request by the Agent)
that a search of the public records disclosed no liens, encumbrances, security
interests, financing statements or title retention agreements which affect the
Property, Petro:Lube Property or New Profit Center Property, other than
Permitted Liens.
15.6.7. NOTICES. All notices required by any governmental authority or
-------
by any applicable requirement to be filed prior to commencement of
construction of the Improvements shall have been filed.
15.6.8. APPRAISAL. An appraisal of the Property, including an
---------
appraisal of the Property on an as completed basis.
15.6.9. PERFORMANCE; NO DEFAULT. The Borrower shall have performed and
-----------------------
complied with all terms and conditions herein required to be performed or
complied with by it at or prior to the date of the Advance, and on the date of
the Advance, there shall exist no Default or Event of Default.
15.6.10. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with
-------------------------
the transactions contemplated by this Credit Agreement and the other Loan
Documents shall be satisfactory to the Agent and the Agent's counsel in form
and substance, and the Agent shall have received all information and such
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counterpart originals on certified copies of such documents and such other
certificates, opinions or documents as the Agent and the Agent's counsel may
reasonably require.
15.6.11. NO DAMAGE. The Improvements shall not have been injured or
---------
damaged by fire, explosion, accident, flood or other casualty, unless the
Agent shall have received insurance proceeds sufficient in the judgment of the
Agent to effect the satisfactory restoration of the Improvements and to permit
the completion thereof prior to the Completion Date.
15.6.12. CERTIFICATE. If requested by the Agent, a certificate of the
-----------
Construction Inspector in the form of Exhibit R.
---------
15.6.13. APPROVAL BY CONSTRUCTION INSPECTOR. If required by the Agent,
----------------------------------
as to the final Advance or Revolving Credit Loan for each Project,
notification from the Construction Inspector to the effect that the
Improvements have been completed in a good and workmanlike manner in material
accordance with the Plans and Specifications.
15.6.14. FINAL SURVEY. As to the final advance for each Project, a
------------
final survey reasonably acceptable to the Agent showing the as-built location
of the completed Improvements.
15.6.15. CERTIFICATE OF THE BORROWER'S ARCHITECT. As to the final
---------------------------------------
Advance or Revolving Credit Loan for each Project, a certificate of the
Borrower's Architect (of if there is no Borrower's Architect), such other
officer of the Borrower responsible for such Project that the Improvements
have been completed in all material respects in accordance with the Plans and
Specifications and that the Improvements comply in all material respects with
all applicable requirements and governmental approvals and are in all respects
(except for work to be performed by tenants) ready for occupancy.
15.6.16. PAYMENT OF COSTS. Evidence satisfactory to the Agent that all
----------------
sums due in connection with the construction of the Improvements have been
paid in full (or will be paid out of the funds requested to be advanced) and
that no party claims or has a right to claim any statutory or common law lien
arising out of the construction of the Improvements or the supplying of labor,
material, and/or services in connection therewith (other than for monies to be
paid with the proceeds of such Advance or Revolving Credit Loan or otherwise
at such time).
16. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
16.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
----------------------------------
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans or any
Reimbursement Obligation when the same shall become due and payable,
<PAGE>
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whether at the stated date of maturity or any accelerated date of maturity or
at any other date fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay any
interest on the Loans, the commitment fee, any Letter of Credit Fee or the
Agent's fee, when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other date
fixed for payment or shall fail to pay any other sums due hereunder or under
any of the other Loan Documents within five (5) days of when the same shall
become due and payable;
(c) the Borrower shall fail to comply with any of its covenants
contained in (S)11 (other than the covenants contained in (S)11.2, (S)11.4,
the second sentence of (S)11.6, (S)11.8 and (S)11.11), (S)12 (other than (i)
the covenant contained in (S)12.2, but only to the extent of any lien or other
encumbrance which has not been granted by the Borrower or any of its
Subsidiaries and which the Borrower and such Subsidiary is proceeding in good
faith to have released or otherwise discharged; and (ii) the covenant
contained in (S)12.7, but only to the extent the Borrower or its Subsidiary
has taken all action necessary to remediate the violation and such remediation
is possible) or (S)13 or any of the covenants contained in any of the
Mortgages;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained in (S)11.4 for ten (10) Business Days
after written notice of such failure has been given to the Borrower by the
Agent or the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this (S)16.1) for thirty
(30) days after written notice of such failure has been given to the Borrower
by the Agent;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or in
any other document or instrument delivered pursuant to or in connection with
this Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) a Change of Control shall occur;
(g) a default or an event of default shall occur with respect to the
New Notes;
(h) a default or an event of default shall occur with respect to the
Old Notes;
(i) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized Leases, if
the aggregate principal amount of such Indebtedness is in excess of $250,000,
or fail to observe or perform any material term, covenant or agreement
contained in any agreement
<PAGE>
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by which it is bound, evidencing or securing borrowed money or credit received
or in respect of any Capitalized Leases in each case in such amount for such
period of time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(j) the Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Borrower or any of its Subsidiaries or of any
substantial part of the assets of the Borrower or any of its Subsidiaries or
shall commence any case or other proceeding relating to the Borrower or any of
its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such petition
or application shall be filed or any such case or other proceeding shall be
commenced against the Borrower or any of its Subsidiaries and the Borrower or
any of its Subsidiaries shall indicate its approval thereof, consent thereto
or acquiescence therein;
(k) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case
or other proceeding, or a decree or order for relief is entered in respect of
the Borrower or any Subsidiary of the Borrower in an involuntary case under
federal bankruptcy laws as now or hereafter constituted;
(l) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of its
Subsidiaries exceeds insurance coverage applicable thereto for which the
relevant insurance carrier has accepted liability by $250,000 or more, in the
aggregate;
(m) the holders of all or any part of the New Notes shall accelerate
the maturity of all or any part of the New Notes or the New Notes shall be
prepaid, redeemed or repurchased in whole or in part or the holders shall have
the right to require such New Notes to be prepaid, redeemed or repurchased in
whole or in part;
(n) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or liens in
any material Collateral shall cease to be perfected, or shall cease to have
the priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Banks (other than due to the negligence
of the Agent in failing to make any filings required to be made by the Agent),
or any action at
<PAGE>
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law, suit or in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of the Borrower
or any of its Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory authority
or agency of competent jurisdiction shall make a determination that, or issue
a judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;
(o) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in
their reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $250,000 and
such event in the circumstances occurring reasonably could constitute grounds
for the termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan; or the
PBGC shall have instituted proceedings to terminate such Guaranteed Pension
Plan;
(p) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any part of its business
and such order shall continue in effect for more than thirty (30) days and
could reasonably be expected to have a material adverse effect on the
business, assets or financial condition of the Borrower and its Subsidiaries,
considered as a whole;
(q) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty, which in any such case causes, for more than thirty (30)
consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Borrower or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and could reasonably be expected to have a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries, considered as a whole;
(r) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by the
Borrower or any of its Subsidiaries if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a material adverse
effect on the business or financial condition of the Borrower and its
Subsidiaries, considered as a whole; or
(s) the Borrower or any of its Subsidiaries shall be indicted for a
state or federal crime, or criminal action shall otherwise have been brought
against the Borrower or any of its Subsidiaries, a punishment for which in any
such case
<PAGE>
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could include the forfeiture of any assets of the Borrower or such Subsidiary
having a fair market value in excess of $250,000;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, notice of intention to accelerate maturity (including,
without limitation, the notice of intent to accelerate and the notice of such
acceleration), protest or other notice of any kind all of which are hereby
expressly waived by the Borrower; provided that in the event of any Event of
--------
Default specified in (S)(S)16.1(j), 16.1(k) or (S)16.1(m) (but only as
(S)16.1(m) pertains to the acceleration of the New Notes), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
16.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of Default
--------------------------
specified in (S)16.1(j), (S)16.1(k) or (S)16.1(m) (but only as (S)16.1(m)
pertains to the acceleration of the New Notes) shall occur, any unused portion
of the Total Commitment and the Total Expansion Commitment hereunder shall
forthwith terminate and each of the Banks shall be relieved of all further
obligations to make Loans to the Borrower and the Agent shall be relieved of all
further obligations to issue, extend or renew Letters of Credit. If any other
Event of Default shall have occurred and be continuing, the Agent may and, upon
the request of the Majority Banks shall, by notice to the Borrower, terminate
the unused portion of the Total Commitment and the Total Expansion Commitment
hereunder, and upon such notice being given such unused portion of the Total
Commitment and the Total Expansion Commitment hereunder shall terminate
immediately and each of the Banks shall be relieved of all further obligations
to make Loans (including any Advances) and the Agent shall be relieved of all
further obligations to issue, extend or renew Letters of Credit. No termination
of the Total Commitment and the Total Expansion Commitment hereunder shall
relieve the Borrower or any of its Subsidiaries of any of the Obligations (other
than as provided in (S)2.2).
16.3. REMEDIES. In case any one or more of the Events of Default shall have
--------
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Loans pursuant to (S)16.1, each Bank, if owed any amount
with respect to the Loans or the Reimbursement Obligations, may, with the
consent of the Majority Banks but not otherwise, proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Credit Agreement and the other Loan Documents or any instrument pursuant to
which the Obligations to such Bank are evidenced, including as permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and, if
-- -----
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such Bank.
No remedy herein conferred upon any Bank or the Agent or the holder of any Note
or purchaser of any Letter of Credit Participation is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and shall be
in
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addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law.
16.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following the
------------------------------------
occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies in connection with
the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or sustained
by the Agent in connection with the collection of such monies by the Agent,
for the exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Credit
Agreement or any of the other Loan Documents or in respect of the Collateral
or in support of any provision of adequate indemnity to the Agent against any
taxes or liens which by law shall have, or may have, priority over the rights
of the Agent to such monies;
(b) Second, to all other Obligations in such order or preference as
the Majority Banks may determine; provided, however, that distributions in
-------- -------
respect of such obligations shall be made (i) pari passu among Obligations
---- -----
with respect to the Agent's fee payable pursuant to (S)8.2 and all other
Obligations and (ii) Obligations owing to the Banks with respect to each type
of Obligation such as interest, principal, fees and expenses, shall be made
among the Banks pro rata; and provided, further, that the Agent may in its
--- ---- -------- -------
discretion make proper allowance to take into account any Obligations not then
due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks and the Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant to
(S)9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
17. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank under the Loan Documents. Each
of the Banks agrees with each other Bank that (a) if an amount to be set off is
to be applied to Indebtedness of the Borrower to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank or constituting
Reimbursement Obligations owed to such Bank, such amount shall be applied
ratably to such other
<PAGE>
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Indebtedness and to the Indebtedness evidenced by all such Notes held by such
Bank or constituting Reimbursement Obligations owed to such Bank, and (b) if
such Bank shall receive from the Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Notes held by, or constituting Reimbursement Obligations
owed to, such Bank by proceedings against the Borrower at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by, or Reimbursement Obligations owed to, such Bank any
amount in excess of its ratable portion of the payments received by all of the
Banks with respect to the Notes held by, and Reimbursement Obligations owed to,
all of the Banks, such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
---
tanto assignment of claims, subrogation or otherwise as shall result in each
- -----
Bank receiving in respect of the Notes held by it or Reimbursement obligations
owed it, its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter recovered
- --------
from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
18. THE AGENT.
---------
18.1. AUTHORIZATION.
-------------
(a) The Agent is authorized to take such action on behalf of each of
the Banks and to exercise all such powers as are hereunder and under any of
the other Loan Documents and any related documents delegated to the Agent,
together with such powers as are reasonably incident thereto, provided that no
--------
duties or responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that
of an independent contractor. The use of the term "Agent" is for convenience
only and is used to describe, as a form of convention, the independent
contractual relationship between the Agent and each of the Banks. Nothing
contained in this Credit Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship between
the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative"
of the Banks, as that term is defined in Article 1 of the Uniform Commercial
Code, for purposes of actions for the benefit of the Banks and the Agent with
respect to all collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of the Agent as "secured
party", "mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to the
attachment, perfection, priority or enforcement of any security interests,
mortgages or deeds of trust in collateral
<PAGE>
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security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agent.
18.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute its
--------------------
duties by or through employees or agents and shall be entitled to take, and to
rely on, advice of counsel concerning all matters pertaining to its rights and
duties under this Credit Agreement and the other Loan Documents. The Agent may
utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower, except in any case where this Credit Agreement
provides that the Borrower is not responsible for costs.
18.3. NO LIABILITY. Neither the Agent nor any of its shareholders, directors,
------------
officers or employees nor any other Person assisting them in their duties nor
any agent or employee thereof, shall be liable for any waiver, consent or
approval given or any action taken, or omitted to be taken, in good faith by it
or them hereunder or under any of the other Loan Documents, or in connection
herewith or therewith, or be responsible for the consequences of any oversight
or error of judgment whatsoever, except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence.
18.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
------------------
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrower or any of its
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes or to inspect any of the properties, books or records of
the Borrower or any of its Subsidiaries. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by the
Borrower or any holder of any of the Notes shall have been duly authorized or is
true, accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the credit worthiness or financial
conditions of the Borrower or any of its Subsidiaries. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or any other
Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
18.5. PAYMENTS.
--------
18.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the Agent
-----------------
hereunder or under any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to
<PAGE>
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distribute to each Bank such Bank's pro rata share of payments received by the
--- ----
Agent for the account of the Banks except as otherwise expressly provided
herein or in any of the other Loan Documents.
18.5.2. DISTRIBUTION BY AGENT. If a court of competent jurisdiction
---------------------
shall adjudge that any amount received and distributed by the Agent is to be
repaid, each Person to whom any such distribution shall have been made shall
either repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons as
shall be determined by such court.
18.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
----------------
contained in this Credit Agreement or any of the other Loan Documents, any
Bank for which a receiver is appointed or which is adjudicated bankrupt,
becomes insolvent, or is being operated by a regulatory authority and fails
(a) to make available to the Agent its pro rata share of any Loan or to
--- ----
purchase any Letter of Credit Participation or (b) to comply with the
provisions of (S)16 with respect to making dispositions and arrangements with
the other Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such payments due
--- ----
and payable to all of the Banks, in each case as, when and to the full extent
required by the provisions of this Credit Agreement, shall be deemed
delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank until
such time as such delinquency is satisfied. A Delinquent Bank shall be deemed
to have assigned any and all payments due to it from the Borrower, whether on
account of outstanding Loans, Unpaid Reimbursement Obligations, interest, fees
or otherwise, to the remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Loans and
--- ----
Unpaid Reimbursement Obligations. The Delinquent Bank hereby authorizes the
Agent to distribute such payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding Loans and Unpaid
--- ----
Reimbursement Obligations. A Delinquent Bank shall be deemed to have satisfied
in full a delinquency when and if, as a result of application of the assigned
payments to all outstanding Loans and Unpaid Reimbursement Obligations of the
nondelinquent Banks, the Banks' respective pro rata shares of all outstanding
Loans and Unpaid Reimbursement Obligations have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
18.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any Note or
----------------
the purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
18.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
---------
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by (S)17), and liabilities of every nature and character arising out of
or related to this Credit
<PAGE>
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Agreement (including without limitation (S)18.5.2), the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
18.8. AGENT AS BANK. In its individual capacity, FNBB shall have the same
-------------
obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes and
as the purchaser of any Letter of Credit Participations, as it would have were
it not also the Agent.
18.9. RESIGNATION. The Agent may resign at any time by giving sixty (60) days
-----------
prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
which has or has a parent company which has, a senior, unsecured debt rating of
not less than A or its equivalent by Standard & Poor's Ratings Group. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Credit Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
18.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
----------------------------------------------
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this (S)18.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
18.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
---------------------------------
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Majority Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
--------
comply with any such direction to the extent that the Agent reasonably believes
the Agent's
<PAGE>
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compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
19. EXPENSES.
--------
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) subject to the limitations and
requirements of (S)8.3, any taxes (including any interest and penalties in
respect thereto) payable by the Agent or any of the Banks (other than taxes
based upon the Agent's or any Bank's net income or otherwise excluded under
(S)8) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrower hereby agreeing to indemnify the Agent and each Bank
with respect thereto), (c) the reasonable fees, expenses and disbursements of
the Agent's Special Counsel and any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(d) the reasonable fees, expenses and disbursements of the Agent incurred by the
Agent in connection with the preparation, syndication, administration or
interpretation of the Loan Documents and other instruments mentioned herein,
including fees and expenses of commercial finance examiners, fees and expenses
related to the obtaining of the solvency opinion referred to in (S)14.13, title
insurance premiums and surveyor, engineering, environmental consulting and
appraisal charges, (e) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with the Borrower or any of its Subsidiaries hereunder or
under the other Loan Documents or with respect to the transactions contemplated
hereby other than any such litigation, proceeding or dispute in which the Agent
or the applicable Bank has been finally adjudicated to have acted with gross
negligence or willful misconduct or to have violated its obligations under this
Credit Agreement or any law, and (f) all reasonable fees, expenses and
disbursements of any Bank or the Agent incurred in connection with UCC searches,
other title or collateral searches, UCC filings, other collateral filings or
mortgage recordings and taxes relating to or paid in connection with mortgages,
UCC filings and other collateral filings. The covenants of this (S)19 shall
survive payment or satisfaction of all other Obligations.
<PAGE>
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20. INDEMNIFICATION.
---------------
The Borrower agrees to indemnify and hold harmless the Agent and the Banks
from and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Credit Agreement or
any of the other Loan Documents or the transactions contemplated hereby
including, without limitation, (a) any actual or proposed use by the Borrower or
any of its Subsidiaries of the proceeds of any of the Loans or Letters of
Credit, (b) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower or any of its
Subsidiaries comprised in the Collateral, (c) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (d) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding and EXPRESSLY INCLUDING ANY SUCH
CLAIM, ACTION OR SUIT ARISING OUT OF THE ORDINARY, SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH INDEMNIFIED PERSON (but excluding such claim, action or suit
to the extent attributable to the gross negligence or willful misconduct of, or
violation of any law or regulation by, any such indemnified person). In
litigation, or the preparation therefor, the Banks and the Agent shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel; provided, however, the Borrower shall only be required to pay
the reasonable fees and expenses of one such counsel for all the Banks and the
Agent. If, and to the extent that the obligations of the Borrower under this
(S)20 are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The Borrower shall be entitled to notice of
any proceeding in respect of which a claim for indemnity or contribution will be
made and shall be entitled to participate in the defense of any such proceeding.
The failure to provide such notice shall not discharge or reduce any indemnity
or contribution claim except to the extent that the Borrower has been prejudiced
thereby. The covenants contained in this (S)20 shall survive payment or
satisfaction in full of all other Obligations.
21. SURVIVAL OF COVENANTS, ETC.
--------------------------
All covenants, agreements, representations and warranties made herein, in the
Notes, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant
hereto shall be deemed to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of any of the Loans and the issuance,
extension or renewal of any Letters of
<PAGE>
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Credit, as herein contemplated, and shall continue in full force and effect so
long as any Letter of Credit or any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Bank has
any obligation to make any Loans or the Agent has any obligation to issue,
extend or renew any Letter of Credit, and for such further time as may be
otherwise expressly specified with respect to such provisions in this Credit
Agreement. Notwithstanding the foregoing, the covenants contained in (S)(S)11,
12 and 13 shall remain in full force and effect for so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Bank
has any obligation to make any Loans or the Agent has any obligation to issue,
extend or renew any Letters of Credit. All written statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time by or
on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Subsidiary hereunder. The
Agent and the Banks acknowledge and agree that the delivery by the Borrower of
its financial projections and forecasts pursuant to this Credit Agreement does
not constitute a representation or warranty by the Borrower or its Subsidiaries
that the Borrower or such Subsidiary will achieve the results estimated on such
projection or forecast.
22. ASSIGNMENT AND PARTICIPATION.
----------------------------
22.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each Bank
---------------------------------
may assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Credit Agreement (including all or a portion
of its Commitment Percentage with respect to Revolving Credit Loans, Term Loans
A, Term Loans B and Expansion Loan and the same portion of the Loans at the time
owing to it, the Notes held by it and its participating interest in the risk
relating to any Letters of Credit); provided that (a) each of the Agent and, so
--------
long as no Default or Event of Default has occurred and is continuing, the
Borrower shall have given its prior written consent to such assignment, which
consent, in the case of the Borrower, will not be unreasonably withheld, (b)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Bank's rights and obligations in respect of Revolving Credit
Loans, Term Loans A, Term Loans B or Expansion Loans under this Credit
Agreement, provided, however, that nothing contained herein shall restrict any
-------- -------
Bank from making a non-pro rata assignment of its Loans, (c) each assignment
--- ----
shall be in a minimum amount that is at least $5,000,000 (or, if less than
$5,000,000, all of the assigning Bank's rights and obligations in respect of
Revolving Credit Loans, Term Loan A, Term Loan B or Expansion Loan under the
Credit Agreement), (d) the parties to such assignment shall execute and deliver
to the Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of Exhibit D hereto (an
---------
"Assignment and Acceptance"), together with any Notes subject to such assignment
and (e) such Eligible Assignee shall (i) be a financial institution organized
under the laws of the United States, or any State thereof or the District of
Columbia or (ii) have duly filed with the Borrower and the Agent, Internal
Revenue Service Form 1001 or Form 4224 (or any successor or similar form)
evidencing that deduction or withholding of United States income taxes is not
required. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5)
<PAGE>
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Business Days after the execution thereof, (a) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (b) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the Agent
of the registration fee referred to in (S)22.3, be released from its obligations
under this Credit Agreement.
22.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
--------------------------------------------------------------
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, the assigning Bank makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage,
(b) the assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower and
its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their obligations under
this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in (S)10.4 and (S)11.4 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
<PAGE>
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(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the
assigning Bank satisfactory to such assignee with respect to its pro rata
--- ----
share, if any, of Letter of Credit Fees in respect of outstanding Letters of
Credit.
22.3. REGISTER. The Agent shall maintain a copy of each Assignment and
--------
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $2,500.
22.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance executed by
---------
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in the
Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such in Assignment and Acceptance and shall otherwise be substantially the form
of the assigned Notes. As soon as reasonably practicable but in any event within
thirty (30) days of issuance of any new Notes pursuant to this (S)22.4, the
Borrower shall deliver an opinion of counsel (which may be the General Counsel
of the Borrower), addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Notes shall be canceled and returned to the Borrower.
22.5. PARTICIPATIONS. Each Bank may sell participations to one or more banks
--------------
or other entities in all or a portion of such Bank's rights and obligations
under this Credit Agreement and the other Loan Documents; provided that (s) each
--------
such participation
<PAGE>
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shall be in an amount of not less than $2,500,000, (b) any such sale or
participation shall not affect the rights and duties of the selling Bank
hereunder to the Borrower and (c) the only rights granted to the participant
pursuant to such participation arrangements with respect to waivers, amendments
or modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the interest
rate on any Loans, extend the term or increase the amount of the Commitment of
such Bank as it relates to such participant, reduce the amount of any commitment
fees or Letter of Credit Fees to which such participant is entitled or extend
any regularly scheduled payment date for principal or interest.
22.6. DISCLOSURE. The Borrower agrees that in addition to disclosures made in
----------
accordance with standard and customary banking practices any Bank may disclose
information obtained by such Bank pursuant to this Credit Agreement to assignees
or participants and potential assignees or participants hereunder; provided that
--------
such assignees or participants or potential assignees or participants shall
agree (a) to treat in confidence such information unless such information
otherwise becomes public knowledge, (b) not to disclose such information to a
third party, except upon the order of any court or administrative agency, or
upon the request of any administrative agency or authority, or upon the request
or demand of any regulatory agency or authority, or otherwise as required by law
and (c) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation; provided that (to
--------
the extent permitted by applicable law) such Bank will promptly notify the
Borrower of disclosures of confidential information under the exception in
clause (b) above.
22.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any assignee
----------------------------------------------------
Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no
right to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agent pursuant to (S)16.1 or (S)16.2, and the
determination of the Majority Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to such assignee Bank's interest
in any of the Loans. If any Bank sells a participating interest in any of the
Loans or Reimbursement Obligations to a participant, and such participant is the
Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Agent of the sale of such participation. A transferor Bank
shall have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to (S)16.1 or (S)16.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such transferor Bank in the Loans to the extent of
such participation.
22.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall retain
-----------------------------------
its rights to be indemnified pursuant to (S)20 with respect to any claims or
actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the
<PAGE>
-114-
laws of the United States of America or any state thereof, it shall, as a
condition precedent to the effectiveness of the assignment and prior to the date
on which any interest or fees are payable hereunder or under any of the other
Loan Documents for its account, deliver to the Borrower and the Agent
certification as to its exemption from deduction or withholding of any United
States federal income taxes. If any Reference Bank transfers all of its
interest, rights and obligations under this Credit Agreement, the Agent shall,
in consultation with the Borrower and with the consent of the Borrower and the
Majority Banks, appoint another Bank to act as a Reference Bank hereunder.
Anything contained in this (S)22 to the contrary notwithstanding, any Bank may
at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under (S)4 of the Federal Reserve Act, 12
U.S.C. (S)341. No such pledge or the enforcement thereof shall release the
pledgor Bank from its obligations hereunder or under any of the other Loan
Documents.
22.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer any
----------------------
of its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Banks.
22.10. SYNDICATION. The Borrower shall provide such written information as is
-----------
reasonably necessary to enable the Agent to complete the syndication of the
Obligations. In addition, the management of the Borrower will be available at
all reasonable times to answer questions and otherwise cooperate in the
syndication process.
23. NOTICES, ETC.
------------
Except as otherwise expressly provided in this Credit Agreement, all notices
and other communications made or required to be given pursuant to this Credit
Agreement or the Notes or any Letter of Credit Applications shall be in writing
and shall be delivered in hand, mailed by United States registered or certified
first class mail, postage prepaid, sent by overnight courier, or sent by
telegraph, telecopy, facsimile or telex and confirmed by delivery via courier or
postal service, addressed as follows:
(a) if to the Borrower, at 6080 Surety Drive, El Paso, Texas 79905,
Attention: Chief Financial Officer with a copy to each of (i) Petro GP at c/o
Chartwell Investments Inc., 717 Fifth Avenue, New York, New York 10022; and
(ii) Russell W. Parks, Jr., P.C., Akin, Gump, Strauss, Hauer & Feld, L.L.P,
1333 New Hampshire Avenue, NW., Suite 400, Washington, DC. 20036; or at such
other address for notice as the Borrower shall have furnished in writing to
the Person giving the notice;;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Michael P. Hannon, Director, Energy & Utilities
Division or such other address for notice as the Agent shall last have
furnished in writing to the Person giving the notice; and
<PAGE>
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(c) if to any Bank, at such Bank's address set forth on Schedule 1
-------- -
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made and
to have become effective (a) if delivered by hand, overnight courier, telegraph,
telecopy, telex or facsimile to a responsible officer of the party to which it
is directed, at the time of the receipt thereof by such officer or the receipt
of such telegraph, telecopy, telex or facsimile and (b) if sent by registered or
certified first-class mail, postage prepaid, on the third Business Day following
the mailing thereof; provided, however, that telexed, telecopied or facsimile
-------- -------
notices received by any party after its normal business hours (or on a day other
than a Business Day) shall be effective on the next Business Day.
24. GOVERNING LAW.
-------------
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN,
EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)23. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
25. HEADINGS.
--------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
26. COUNTERPARTS.
------------
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
<PAGE>
-116-
27. ENTIRE AGREEMENT, ETC.
---------------------
The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)29.
28. WAIVER OF JURY TRIAL.
--------------------
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (a)
certifies that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
29. CONSENTS, AMENDMENTS, WAIVERS, ETC.
----------------------------------
Any consent or approval required or permitted by this Credit Agreement to be
given by all of the Banks may be given, and any term of this Credit Agreement,
the other Loan Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or any
of its Subsidiaries of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the written consent of the Majority Banks. Notwithstanding the
foregoing, a decrease in the rate of interest on the Notes, extension of
maturities of the Notes, extension of any date fixed for payment, an increase in
the amount of the Commitments of the Banks or the maximum amounts of the Term
Loans, the release of Collateral having a fair market value in excess of
$15,000,000 in any single transaction or series of related transactions and the
release of Collateral having a fair market value in excess of $30,000,000 in the
aggregate during the term of this Credit Agreement (in each case other than a
release of Collateral in connection with any disposition permitted by
(S)12.5.2), and the amount of commitment fee or Letter of Credit Fees hereunder
may not be changed without the written consent of the Borrower and the written
consent of each Bank affected thereby; the definition of Majority Banks and this
(S)29 may not be amended without the written consent of all of the Banks; and
the amount of the Agent's Fee or any Letter of Credit Fees payable for the
Agent's account and (S)18 may not be amended without the written consent of the
Agent. No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or delay or
omission on the
<PAGE>
-117-
part of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
30. SEVERABILITY.
------------
The provisions of this Credit Agreement and the Loans by each Bank are
severable and if any one clause or provision hereof or any Loan shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision or
Loan, or part thereof, in such jurisdiction, and shall not in any manner affect
such clause or provision or Loan in any other jurisdiction, or any other clause
or provision of this Credit Agreement or Loan in any jurisdiction.
31. NO RECOURSE AGAINST OTHERS.
--------------------------
No director, officer, employee, stockholder, general or limited partner or
incorporator, past, present or future, of the Borrower or any of its
Subsidiaries, as such or in such capacity, shall have any personal liability for
any Obligations as maker or guarantor of the Notes, or otherwise under any of
the Loan Documents by reason of his, her or its status as such director,
officer, employee, stockholder, general or limited partner or incorporator.
This limitation of liability does not apply to any claim under the Securities
Act of 1933 or the Securities Exchange Act of 1934, and the Banks are not
waiving any rights under such laws.
32. CONFIDENTIALITY.
---------------
The Agent and each Bank agrees to exercise reasonable efforts to keep any
confidential information delivered or made available by the Borrower to it
confidential from anyone other than persons employed or retained by the Agent or
such Bank, including legal counsel, who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans; provided,
--------
however, that nothing herein shall prevent the Agent or any Bank from disclosing
- -------
such information (a) to any replacement Agent or other Bank, (b) upon the order
of any court or administrative agency, (c) upon the request or demand of any
regulatory agency or authority having jurisdiction over the Agent or such Bank,
(d) which has been publicly disclosed by or on behalf of the Borrower, (e) to
the extent reasonably required in connection with any litigation to which the
Agent, any Bank or their respective affiliates may be a party, (f) to the extent
reasonably required in connection with any audits or accountings and (g) to any
actual or proposed participant, assignee or other transferee of all or part of
its rights hereunder which has agreed in writing to be bound by the provisions
of this (S)32; provided, that, should disclosure of any such confidential
--------
information be required by virtue of either clause (b) or (c) of the immediately
preceding sentence, the party making such disclosure shall promptly notify the
Borrower as to allow the Borrower to seek a protective order or to take any
other appropriate action; provided, further, that, neither the Agent nor any
-------- -------
Bank shall be required to delay compliance with any directive to disclose any
such information so as to allow the Borrower to effect any such action.
<PAGE>
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33. TRANSITIONAL ARRANGEMENTS.
-------------------------
33.1. ORIGINAL CREDIT AGREEMENT SUPERSEDED. This Credit Agreement shall on
------------------------------------
the Closing Date amend and restate the Original Credit Agreement in its
entirety, except as provided in this (S)33. On the Closing Date, the rights and
obligations of the parties evidenced by the Original Credit Agreement shall be
evidenced by the Credit Agreement and the other Loan Documents, the "Revolving
Credit Loans" as defined in the Original Credit Agreement shall be converted to
Revolving Credit Loans as defined herein, "Term Loan A" as defined in the
Original Credit Agreement shall be converted to a portion of the Term Loan A as
defined herein, "Term Loan B" as defined in the Original Credit Agreement shall
be converted to a portion of the Term Loan B as defined herein, and all
outstanding letters of credit issued by the Agent for the account of the
Borrower prior to the Closing Date shall, for purposes of this Credit Agreement,
be Letters of Credit.
33.2. RETURN AND CANCELLATION OF NOTES. As soon as reasonably practicable
--------------------------------
after its receipt of its Revolving Credit Note and Term Notes hereunder on the
Closing Date, the Banks will promptly return to the Borrower, marked
"Substituted" or "Cancelled" as the case may be, any notes of the Borrower held
by the Banks pursuant to the Original Credit Agreement.
33.3. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All interest and fees and
--------------------------------------------
expenses, if any, owing or accruing under or in respect of the Original Credit
Agreement through the Closing Date shall be calculated as of the Closing Date
(prorated in the case of any fractional periods), and shall be paid in
accordance with the method, and on the dates, specified in the Original Credit
Agreement, as if the Original Credit Agreement were still in effect. Commencing
on the Closing Date, the commitment fee shall be payable by the Borrower to the
Agent for the account of the Banks in accordance with (S)2.2.
<PAGE>
-119-
IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement
as a sealed instrument as of the date first set forth above.
PETRO STOPPING CENTERS, L.P.
By:/s/ Larry J. Zine
-------------------------------------
Name: Larry J. Zine
Title: Exec. Vice President
THE FIRST NATIONAL BANK
OF BOSTON, individually and as Agent
By:/s/ Michael P. Hannon
-------------------------------------
Name: Michael P. Hannon
Title: Director
<PAGE>
EXHIBIT 4.10
- ----------------------------------------------------------------------------
| FIRST AMENDMENT |
| TO AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT |
| AND LIMITED WAIVER |
- ----------------------------------------------------------------------------
First Amendment to Amended and Restated Revolving Credit and Term Loan
Agreement and Limited Waiver (the "First Amendment"), dated as of February 12,
1997, by and among PETRO STOPPING CENTERS, L.P., a Delaware limited partnership
(the "Borrower") and THE FIRST NATIONAL BANK OF BOSTON and the other lending
institutions listed on Schedule 1 to the Credit Agreement (as hereinafter
----------
defined) (collectively, the "Banks"), amending and waiving certain provisions of
the Amended and Restated Revolving Credit and Term Loan Agreement dated as of
January 30, 1997 (as amended and in effect from time to time, the "Credit
Agreement") by and among the Borrower, the Banks and THE FIRST NATIONAL BANK OF
BOSTON as agent for the Banks (in such capacity, the "Agent"). Terms not
otherwise defined herein which are defined in the Credit Agreement shall have
the same respective meanings herein as therein.
WHEREAS, the Borrower and the Banks have agreed to modify and waive certain
terms and conditions of the Credit Agreement as specifically set forth in this
First Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. AMENDMENT TO (S)1 OF THE CREDIT AGREEMENT. Section 1 of the Credit
--------- -- ---- -- --------------------
Agreement is hereby amended as follows:
(a) The definition of "Eligible Assignee" is hereby amended by inserting
immediately after the words "commercial finance company" in paragraph (e) of
such definition a comma and the words "mutual fund"; and
(b) The definition of "Indebtedness" is hereby amended by deleting the words
"event though" which appear in paragraph (n)(ii) of such definition and
substituting in place thereof the words "even though".
(S)2. AMENDMENT TO (S)8 OF THE CREDIT AGREEMENT. Section 8.3(d) of the
--------- -- ---- -- --------------------
Credit Agreement is hereby amended by (a) inserting immediately after the roman
numeral (ii) which appears in (S)8.3(d) the words "(x) if it is a "bank" within
the meaning of Section 881(c)(3)(A) of the Code,"; and (b) inserting immediately
after the words "applicable year" which appear in (S)8.3(d) the words ", or (y),
if such Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224, such
Bank has delivered (a) a certificate substantially in the form of Exhibit S and
---------
(b) two completed and signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's entitlement to an exemption from
United States withholding tax with respect to payments of interest to be made
under this Credit Agreement and under any of the Notes and such documents shall
be deemed to constitute such Bank's "Prescribed Forms" for purposes of the Loan
Documents".
(S)3. AMENDMENT TO (S)10 OF THE CREDIT AGREEMENT. Section 10.23 of the
--------- -- ----- -- --------------------
Credit Agreement is hereby amended by deleting the words "which is the period of
52 or 53 weeks ending as set forth in Schedule 10.23" which appear in (S)10.23
--------------
and substituting in place thereof the words "which is the twelve months ending
on December 31 of each year".
<PAGE>
-2-
(S)4. AMENDMENT TO (S)11 OF THE CREDIT AGREEMENT. Section 11.12 of the
--------- -- ----- -- --------------------
Credit Agreement is hereby amended by deleting the words "shall not be
permitted" which appear in the proviso of (S)11.12 and substituting in place
thereof the words "shall be permitted".
(S)5. AMENDMENT TO (S)12 OF THE CREDIT AGREEMENT. Section 12 of the Credit
--------- -- ----- -- --------------------
Agreement is hereby amended as follows:
(a) Section 12.1(p) of the Credit Agreement is hereby amended by inserting
immediately after the end of the text of (S)12.1(p) the words "undertaken solely
for bona fide hedging or interest rate protection purposes"; and
(b) Section 12.11 of the Credit Agreement is hereby amended by deleting the
reference to (S)10.22 in (S)12.11 and substituting in place thereof a reference
to (S)10.23.
(S)6. AMENDMENT TO (S)15 OF THE CREDIT AGREEMENT. Section 15.6.15 of the
--------- -- ----- -- --------------------
Credit Agreement is hereby amended by deleting the words "(of if there is no
Borrower's Architect), such other officer of the Borrower responsible for such
Project" and substituting in place thereof the words "(or if there is no
Borrower's Architect, such other officer of the Borrower responsible for such
Project)".
(S)7. AMENDMENT TO (S)18 OF THE CREDIT AGREEMENT. Section 18 of the Credit
--------- -- ----- -- --------------------
Agreement is hereby amended as follows:
(a) Section 18.7 of the Credit Agreement is hereby amended by deleting the
reference to (S)17 which appears in (S)18.7 and substituting in place thereof
the words "(S)(S)19 and 20 and without relieving the Borrower of any liability
therefor"; and
(b) Section 18.11 of the Credit Agreement is hereby amended by inserting
immediately after the words "the Agent may reasonably request" which appear in
paragraph (b) of (S)18.11 the words "(except that the Agent shall not be
entitled to indemnity against any cost, claim or action which results solely
from the Agent's gross negligence or willful misconduct)".
(S)8. AMENDMENT TO (S)22 OF THE CREDIT AGREEMENT. Section 22 of the Credit
--------- -- ----- -- --------------------
Agreement is hereby amended as follows:
(a) Section 22.1 of the Credit Agreement is hereby amended by (i) deleting
the words ", in the case of the Borrower," which appear in paragraph (a) of
(S)22.1; and (ii) deleting the words "a financial institution" which appear in
clause (i) of paragraph (e) of (S)22.1; and
(b) Section 22.6 of the Credit Agreement is hereby amended by (i) deleting
the letter "(a)" which appears in (S)22.6 and (ii) deleting all the text which
appears immediately after the words "to treat in confidence such information"
and substituting in place thereof the words "in the same manner as Banks under
(S)32".
<PAGE>
-3-
(S)9. AMENDMENT TO (S)29 OF THE CREDIT AGREEMENT. Section 29 of the Credit
--------- -- ----- -- --------------------
Agreement is hereby amended by inserting immediately after the words "increase
in the amount of the Commitments" which appears in the second sentence of (S)29
the words "or the Expansion Commitments".
(S)10. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is further
--------- -- ----------------
amended as follows:
(a) by attaching thereto the new Exhibit S, which shall be in substantially
---------
the form as the Exhibit S attached hereto; and
---------
(b) by deleting Schedule 10.23 in its entirety.
--------------
(S)11. LIMITED WAIVER. The parties hereto hereby acknowledge and agree that
--------------
pursuant to (a) (S)22.1(c) of the Credit Agreement, each assignment shall be in
a minimum amount that is at least $5,000,000 (or, if less than $5,000,000, all
of the assigning Bank's rights and obligations in respect of Revolving Credit
Loans, term Loan A, Term Loan B or the Expansion Loan under the Credit
Agreement); and (b) (S)22.1 of the Credit Agreement, the effective date of any
Assignment and Acceptance shall be at least five (5) Business Days after the
execution thereof. The Borrower and the Banks have provided the Agent with
notice that in connection with an Assignment and Acceptance dated as of February
12, 1997, (a) The First National Bank of Boston desires to assign (i)
$2,500,000 of its interests, rights and obligations under the Credit Agreement
to TCW Asset Management Company; (ii) $3,333,333.33 of its interests, rights and
obligations under the Credit Agreement to Merrill Lynch Senior Floating Rate
Fund, Inc.; and (iii) $3,333,333.33 of its interests, rights and obligations
under the Credit Agreement to Merrill Lynch Prime Rate Portfolio, which
assignments would not be permitted pursuant to (S)22.1(c) of the Credit
Agreement and (b) the parties to such Assignment and Acceptance desire that the
effective date thereunder be February 12, 1997, which would not be permitted
pursuant to (S)22.1 of the Credit Agreement. As such, the Borrower has
requested that the Agent and the Banks waive, to the limited extent necessary to
permit the above-referenced non-compliance, the minimum assignment amounts set
forth in (S)22.1(c) and the five (5) day waiting period for effectiveness of an
Assignment and Acceptance which is set forth in (S)22.1. In response to the
Borrower's request, upon the effectiveness of this First Amendment as described
in (S)12 below, the Banks and the Agent hereby waive the above-described
provisions of (S)(S)22.1(c) and 22.1 of the Credit Agreement solely to the
extent necessary to permit the above-referenced non-compliance. Nothing
contained in this (S)11 shall extend to any other provisions of the Credit
Agreement or any of the other Loan Documents or to any matters not expressly
waived herein, or be construed to imply a willingness on the part of the Agent
and the Banks to grant any similar or other future waivers of any of the terms
and conditions of the Credit Agreement or the other Loan Documents.
(S)12. CONDITIONS TO EFFECTIVENESS. This First Amendment shall not become
---------------------------
effective until the Agent receives a counterpart of this First Amendment
executed by the Borrower, the Guarantors and the Banks.
(S)13. REPRESENTATIONS AND WARRANTIES. The Borrower hereby repeats, on and
------------------------------
as of the date hereof, each of the representations and warranties made by it in
(S)10 of the Credit Agreement (except to the extent of changes resulting from
matters contemplated or permitted by the Credit Agreement and the other Loan
Documents, changes occurring in the ordinary course of business that singly or
in the aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date), provided,
--------
that all references therein to the Credit Agreement shall refer to such Credit
Agreement as amended hereby. In addition, the Borrower hereby represents and
warrants that the execution and delivery by the Borrower of this First Amendment
and the performance by the Borrower of all of its agreements and obligations
under the Credit Agreement as amended hereby are within the corporate authority
of the Borrower and have been duly authorized by all necessary corporate action
on the part of the Borrower, and further represents and warrants that the
execution and deliver by the Borrower of this First Amendment and the
performance by the Borrower of the transactions contemplated hereby will not
contravene any term or condition set forth in any agreement to which the
Borrower is a party or by which the Borrower is bound.
<PAGE>
-4-
(S)14. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
------------ ---
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this First Amendment shall be read and construed as a
single agreement. All references in the Credit Agreement, the Loan Documents or
any related agreement or instrument to the Credit Agreement shall hereafter
refer to the Credit Agreement as amended hereby.
(S)15. NO WAIVER. Nothing contained herein shall constitute a waiver of,
---------
impair or otherwise affect any Obligations, any other obligation of the Borrower
or any rights of the Agent or the Banks consequent thereon.
(S)16. COUNTERPARTS. This First Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)17. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-5-
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as a
document under seal as of the date first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ David A. Haug
-----------------------------------
Name: David A. Haug
Title: Vice President Finance
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Michael P. Hannon
-----------------------------------
Name: Michael P. Hannon
Title: Director
<PAGE>
EXHIBIT 10.2
FRANCHISE AGREEMENTS
1. Franchisee:
----------
Welsh, Inc., formerly known as Crossroads of Virginia, Inc.
P.O. Box 10725
Merrillville, Indiana 46411
Franchised Location:
-------------------
Petro Stopping Center #52
Interstate-81 and U.S. Route 52 (Exit 25)
Fort Chiswell, Virginia 24360
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of March 4, 1985 (expiration date:
March 7, 1996)
(2) Supplement to Franchise Agreement dated as of March 4, 1985
(3) Amendment to Franchise Agreement dated as of February 1, 1991
(4) Second Amendment to Franchise Agreement dated as of November 25,
1991
(5) Third Amendment to Franchise Agreement dated March 1, 1995
(6) Renewal Extension Letter dated March 13, 1995 extending renewal to
May 31, 1995
(7) Renewal Extension Letter dated May 29, 1996 extending renewal to
August 31, 1995
(8) Renewal Extension Letter dated August 29, 1996 extending renewal to
December 31, 1996
<PAGE>
(9) Billing Program Agreement dated as of September 24, 1991
(expiration date: March 7, 1996)
(10) Arbitration Agreement dated as of November 25, 1991
(11) Software License Agreement dated June 8, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers the area from Wytheville, Virginia to the
following points:
(1) North on Interstate 81 in a northeasterly direction to the
intersection of Highway 211;
(2) South on Interstate 81 in a south-southwesterly direction to the
point that is an intersection of Interstate 40 and Interstate 81;
(3) North on State Highway 77 to Ripley, West Virginia; and
(4) South on Highway 77 to Statesville, North Carolina.
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising fee of up to .25% of gross sales for the preceding
calendar month.
<PAGE>
d. Variations to Deposits and Fee Payable Pursuant to Franchise Agreement:
----------------------------------------------------------------------
(1) Royalty fee Waived for first four months of operation
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: No.
-------------------------------------------------------
2. Franchisee:
----------
Highway Service Ventures, Inc.
100 Harbor Oak Drive, Suite 106
Ashland, Virginia 23005
Franchised Location:
-------------------
Petro Stopping Center #51
Interstate-95 & Md. 279 (Exit 109A)
Elkton, Maryland 21921
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of August 9, 1985 (expiration date:
September 29, 1995)
(2) Supplement to Franchise Agreement dated as of August 9, 1985
(3) Second Supplement to Franchise Agreement dated as of April 28, 1987
(4) Amendment to Franchise Agreement dated as of August 21, 1991
(5) Renewal Extension letter dated September 29, 1995 extending renewal
to December 31, 1995
(6) Renewal Extension letter dated February 16, 1996 extending renewal
to March 31, 1996
(7) Renewal Extension letter dated March 29, 1996 extending renewal to
May 31, 1996
<PAGE>
(8) Renewal Extension letter dated May 28, 1996 extending renewal to
August 31, 1996
(9) Renewal Extension letter dated August 29, 1996 extending period to
December 31, 1996
(10) Billing Program Agreement dated as of October 30, 1991 (expiration
date: September 29, 1995)
(11) Arbitration Agreement dated as of October 30, 1991
(12) Software License Agreement dated April 26, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
Highway I-95 and extending one (1) mile from both sides of the right-
of-way of Highway I-95 from a point on Highway I-95 located one hundred
(100) miles north of the Franchised Location to a point on Highway I-95
located (20) miles south of the District of Columbia.
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of gross sales for the preceding
calendar month
<PAGE>
d. Variations from Deposits and Fees Payable Pursuant to Franchise
Agreement
(1) Initial Franchise Fee - $15,000
(2) Fuel Royalty Fee shall relate to on-premise sales of diesel only
and such royalty fee shall be a maximum of $175,000 for one year,
from date business opens and such maximum royalty fee for date
business opens shall increase by 1/2 of increase in CPI for
applicable year for ten years for date business opens
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: No.
-------------------------------------------------------
3. Franchisee:
----------
Goetz Associates Truckstop, Inc.
P.O. Box 489
Portage, Wisconsin 53901
Franchised Location:
- -------------------
Petro Travel Plaza #53
Interstate-90/Interstate-94 (Exit 108) at Highway 78
Portage, Wisconsin 53901
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of October 15, 1985 (expiration date:
December 1, 2001)
(2) Amendment to Franchise Agreement dated as of December 1, 1986
(3) Second Amendment to Franchise Agreement dated as of November 18,
1991
(4) Billing Program Agreement dated September 18, 1991 (expiration
date: September 2, 1996)
<PAGE>
(5) Arbitration Agreement dated as of November 18, 1991
(6) Assignment and Agreement Regarding Franchise Agreement dated as of
May 25, 1995
(7) Third Amendment to Franchise Agreement dated February 23, 1993
(8) Fourth Amendment to Franchise Agreement dated December 30, 1994
(9) Fifth Amendment to Franchise Agreement dated November 27, 1995
(Dairy Queen)
(10) Fifth Amendment to Franchise Agreement dated February 19, 1996
(Little Caesar's)
(11) Software License Agreement dated April 26, 1996 between Goetz
Companies, Inc. and Petro Stopping Centers, L.P.
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following-described portions of Interstate Highways 90, 94 and
90/94, and extending in width one mile from either side of such
Highways: Beginning in length from the north side of the intersection of
State Highway 11 and Interstate Highway 90 ("IH 90"), and extending
north and northwest along IH 90 until IH 90 intersects with Interstate
Highway 94 ("IH 94"), where IH 90 becomes Interstate 90/94 ("IH 90/94");
and continuing northwest along IH 90/94 to a point where IH 94 continues
northwest and IH 90 continues west; and continuing north along IH 94 to
the southern side of the intersection of IH 94 and State Highway 54
near Black River Falls, Wisconsin, and continuing west along IH 90 to
the east side of the intersection of IH 90 and U.S. Highway 53 near La
Crosse, Wisconsin.
<PAGE>
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of all gross sales for the preceding
calendar month
d. Variations to Deposits and Fees Payable Pursuant to Franchise Agreement:
-----------------------------------------------------------------------
(1) Monthly Minimums Gross Sales changed: 1 through 6 months 500,000
gallons; 6 through 18 months 500,000 gallons and 18 through
termination 700,000 gallons
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location upon Termination**: No.
-------------------------------------------------------
4. Franchisee:
----------
Truckstop Distributors, Inc.
P.O. Box 639
Walcott, Iowa 52773
Franchised Location:
-------------------
Petro Stopping Center #54
Interstate-44 and State 43 South (Exit 4)
Joplin, Missouri 64804
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of January 2, 1987 (expiration date:
October 11, 1997)
<PAGE>
(2) Amendment to Franchise Agreement dated as of January 2, 1987
(3) Amendment to Franchise Agreement dated as of March 11, 1987.
(4) Amendment to Franchise Agreement dated as of January 29, 1991
(5) Fourth Amendment to Franchise Agreement dated as of January 16,
1992
(6) Billing Program Agreement dated as of December 2, 1990 (expiration
date: October 11, 1993)
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following described portions of U.S. Interstate Highway 44 ("I-44")
and U.S. Federal Highway 69 ("U.S. 69") and extending in width one mile
from either side of such Highways and an area including the right-of-way
of the following described portions of U.S. Interstate Highway 270
("Loop 270") and U.S. Interstate Highway 255 ("Loop 255") and extending
in width one-half mile from either side of such Highways:
(1) From the Franchised Location northeast along I-44 to St. Louis,
Missouri to a point where I-44 intersects with Loop 270 and
continuing southeast to the point at which Loop 270 becomes Loop
255, and from that point, east to the Illinois State line;
(2) From the Franchised Location west along I-44 to Tulsa, Oklahoma to
the point where I-44 reaches the west side of the existing (at the
date of the Franchise Agreement) city limits of Tulsa, Oklahoma;
and
(3) From the Franchised Location southwest along U.S. 69 to the nearest
point on U.S. 69 to McAlester, Oklahoma.
<PAGE>
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of all gross sales for the preceding
calendar month
d. Variations to Deposits and Fees Payable Pursuant to Franchise Agreement:
-----------------------------------------------------------------------
(1) Limitation of monthly Gross Sales at Trucker's Stores of $100,000
until monthly sales at all Trucker's stores, company-owned and
franchised, exceed $100,000
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location upon Termination**: No.
-------------------------------------------------------
5. Franchisee:
----------
Highway Service Ventures, Inc.
100 Harbor Oak Drive, Suite 106
Ashland, Virginia 23005
Franchised Location:
-------------------
Petro Stopping Center #56
Interstate-95 & Route 207 (Exit 41)
Ruther Glen, Virginia 22546
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of April 15, 1987 (expiration date:
March 13, 1998)
<PAGE>
(2) Supplement to Franchise Agreement dated as of April 28, 1987
(3) Amendment to Franchise Agreement dated as of August 21, 1991
(4) Billing Program Agreement dated as of October 30, 1991 (expiration
date: March 13, 1998)
(5) Arbitration Agreement dated as of October 30, 1991
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following described portions of U.S. Interstate Highway 95 ("I-95")
and U.S. Interstate Highway 85 ("I-85") and extending in width one mile
from the right-of-way line of both sides of such Highways:
(1) From the Franchised Location north along I-95 to the southern side
of the boundary of the Franchise Area for the Elkton, Maryland
franchise (approximately 20 miles from the city limits of
Washington, D.C.); and
(2) From the Franchised Location south along I-95 to the point on I-95
nearest Rocky Mount, North Carolina; and
(3) From the point south of Richmond, Virginia where I-85 and I-95
split, south along I-85 to the North Carolina State line.
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee (credited against Initial Franchise Fee)
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales
<PAGE>
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of all gross sales for the preceding
Calendar Month
d. Variations to Deposits and Fees Payable Pursuant to Franchise Agreement:
-----------------------------------------------------------------------
(1) Fuel sales exclude bulk fuel sales and relating only to on-premises
sales of diesel fuel with a maximum royalty fee of $175,000 for one
year, commencing on the date the Franchised Location opens for
business, increasing each year during the initial term by 1/2 of
the increase in the Consumer Price Index
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: No.
-------------------------------------------------------
6. Franchisee:
----------
Welsh, Inc.
P.O. Box 10725
Merrillville, Indiana 46411
Franchised Location:
-------------------
Petro Stopping Center #55
1401 Ripley Street
Lake Station, Indiana 46405
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of October 8, 1987 (expiration date:
October 14, 1997)
(2) Supplement to Franchise Agreement dated as of October 8, 1987
(3) First Amendment to Franchise Agreement dated as of May 3, 1990
<PAGE>
(4) Second Amendment to Franchise Agreement dated as of November 25,
1991
(5) Third Amendment to Franchise Agreement dated March 15, 1995
(6) Billing Program Agreement dated as of September 24, 1991
(expiration date: October 14, 1997)
(7) Arbitration Agreement dated as of November 25, 1991
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following described portions of United States Interstate Highways
80/90, 94, 65, 80 and 90 (referred to herein as "I-80/90," "I-94," "I-
65," "I-80" and "I-90," respectively) and extending in width one mile
from either side of such Highways:
(1) From the Franchised Location east along I-80/I-90 to the western
side of the intersection of I-80/I-90 and I-65;
(2) From the Franchised Location east along I-94 to the Indiana-
Michigan State line;
(3) From the Franchised Location sought along I-65 to the northern side
of the intersection of Indiana Highway 28 and I-65;
(4) From the Franchised Location west along I-80 to the eastern city
limits of LaSalle, Illinois;
(5) From the Franchised Location north along I-94 to the Wisconsin
State line; and
(6) From the Franchised Location north along I-90 to where I-90
intersects United States Federal Highway 51.
<PAGE>
c. Deposits and Fees Payable:
-------------------------
(1) $1,000 Application Fee
(2) $75,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 3.5% of Gross Sales plus $.0035 per
gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of all gross sales for the preceding
calendar month
d. Variations to Deposits and Fees payable pursuant to Franchise Agreement:
-----------------------------------------------------------------------
(1) Royalty fee waived for the first 8 months commencing on the date
gasoline fuel is land and restaurant open for business; after such
8 months have elapsed full royalties shall be payable thereafter.
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: No.
-------------------------------------------------------
7. Franchisee:
----------
Petro of Richmond, Inc.
500 Graves Blvd.
P.O. Box 856
Salina, Kansas 67402
Franchised Location:
-------------------
Petro Stopping Center #57
6400 National Road East at U.S. 40
New Paris, Ohio 45347
<PAGE>
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of September 1, 1988 (expiration date:
October 29, 1999)
(2) Supplement to Franchise Agreement dated as of September 1, 1988
(3) Amendment to Franchise Agreement dated as of August 7, 1991
(4) Billing Program Agreement dated as of October 1, 1991 (expiration
date: October 29, 1999)
(5) Security Agreement dated September 1, 1988
(6) Guaranty dated September 1, 1988
(7) Consent and Subordination Agreement dated June 23, 1993
(8) Arbitration Agreement dated as of October 1, 1991
(9) Software License Agreement dated June 8, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the Franchised
Location and the right-of-way of the following described portions of
Interstate Highway 70 ("I-70"), Ohio State Highway 56 ("Ohio 56") and
Indiana State Highway 3 ("Indiana 3") and extending in width one mile
from either side of I-70:
(1) From the Ohio/Indiana State line east along I-70 to the west side
of the interchange of I-70 and Ohio 56; and
(2) From the Ohio/Indiana State line west along I-70 to the east side
of the interchange of I-70 and Indiana 3.
<PAGE>
c. Deposits and Fees Payable:
-------------------------
(1) $5,000 Application Fee
(2) $100,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus $.004
per gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales for the preceding calendar month
d. Variations to Deposits and Fees payable pursuant to Franchise Agreement:
-----------------------------------------------------------------------
None.
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
8. Franchisee:
----------
CTM, Inc.
P.O. Box 856
Salina, Kansas 67402
Franchised Location:
-------------------
Petro:2 #81
Interstate-70 at N. 9th Street
Salina, Kansas 67401
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of February 2, 1990 (expiration date:
February 27, 2000)
(2) Amendment to Franchise Agreement dated as of August 7, 1991
<PAGE>
(3) Billing Program Agreement dated as of October 1, 1991 (expiration
date: February 28, 2000)
(4) Second Amendment to Franchise Agreement dated March 19, 1996
(5) Arbitration Agreement dated as of October 1, 1991
(6) Security Agreement dated February 2, 1990
(7) Guaranty dated as of October 1, 1991
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the Franchised
Location and the right-of-way of the following described portions of
Interstate Highways 70 and 135 (referred to herein as "I-70" and "I-35,"
respectively) and United States Highway 81 (referred to as "U.S. 81"):
(1) From the Franchised Location east on I-70 to Exit 330 just east of
Kansas High way 99;
(2) From the Franchised Location west on I-70 to State Highway 183 at
Hays, Kansas;
(3) From the Franchised Location sought on I-135 to Exit 34 north of
Newton, Kansas; and
(4) From the Franchised Location north on U.S. 81 to Kansas Highway 9
at Concordia, Kansas.
c. Deposits and Fees Payable:
-------------------------
(1) $5,000 Application Fee
(2) $20,000 Initial Franchise Fee
<PAGE>
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus $.004
per gallon of Fuel Sales (excluding bulk fuel sales)
(4) Initial Training Fee waived
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations to Deposits and Fees payable pursuant to Franchise Agreement:
-----------------------------------------------------------------------
None.
e. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement: None.
---------
f. Right of First Refusal**: Yes.
----------------------
g. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
9. Franchisee:
----------
Highway Service Ventures, Inc.
100 Harbor Oak Drive, Suite 106
Ashland Virginia 23005
Franchised Location:
-------------------
Petro Stopping Center #58
3001 TV Road
Florence, South Carolina 29501
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of May 11, 1990 (expiration date:
February 10, 2001)
(2) Amendment to Franchise Agreement dated as of August 21, 1991
(3) Billing Program Agreement dated as of October 30, 1991 (expiration
date: February 10, 2001)
<PAGE>
(4) Arbitration Agreement dated as of October 1, 1991
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following described portions of United States Interstate Highways
95 and 20 (referred to herein as "I-95" and "I-20," respectively) and
extending in width one mile from either side of such Highways:
(1) From the Franchised Location north on I-95 to Exit 33 at St. Pauls,
North Carolina;
(2) From the Franchised Location south on I-95 to the South
Carolina/Georgia State line; and
(3) From the Franchised Location west on I-20 to Exit 92 at Lugoff,
South Carolina.
c. Deposits and Fees Payable:
-------------------------
(1) $5,000 Application Fee
(2) $95,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of the Nonfuel Gross Sales plus
$.004 per gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations from Deposits and Fees payable pursuant to Franchise
---------------------------------------------------------------
Agreement: None.
---------
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
<PAGE>
10. Franchisee:
----------
Crossroads of Idaho, Inc.
d/b/a Crossroads of Idaho Stopping Center
P.O. Box 394
Twin Falls, Idaho 83303
Franchised Location:
-------------------
Petro:2 #82
Interstate-84 at U.S. Highway 93
Jerome, Idaho 83338
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of November 8, 1989 (expiration date:
December 16, 2000)
(2) Letter Amendment dated as of November 8, 1989 granting franchisee
right of first refusal, subject to the terms and conditions of
such agreement, for an area including the following described
portions of Interstate Highways 84 and 86 ("IH 84" and "IH 86,"
respectively): From Exit 64 on IH 84 (near Boise, Idaho) north and
west on IH 84 to Exit 374 on IH 84 (near Ontario, Oregon; from
Exit 52 on IH 86 (near Pocatello, Idaho) east on IH 86 to the
intersection of IH 86 and IH 15 and from such intersection north
on Interstate Highway 15 and U.S. Highway 20 (near Idaho Falls,
Idaho); and from the Idaho/Utah border on IH 84 south on IH 84 to
Exit 46 on IH 84 (near Tremonton, Utah)
(3) Amendment to Franchise Agreement dated as of January 27, 1992
(4) Billing Program Agreement dated as of October 1, 1991 (expiration
date: December 16, 2000)
(5) Arbitration Agreement dated as of January 27, 1992
(6) Security Agreement dated November 8, 1989
<PAGE>
(7) Guaranty dated November 8, 1989
(8) Assignment of Petro Franchise Agreement dated July 22, 1991
(9) Consent and Subordination Agreement dated July 22, 1991
(10) Assignment of Petro Franchise Agreement dated November 15, 1995
11) Consent and Subordination Agreement dated November 15, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the following
described portions of Interstate Highways 84 and 86 ("IH 84" and "IH
86," respectively):
(1) From Exit 64 on IH 84 (near Boise, Idaho) south and east on IH 84
to the border of Idaho and Utah; and
(2) From the intersection of IH 84 and IH 86 north and east on IH 86 to
Exit 52 on IH 86 (near Pocatello, Idaho).
c. Deposits and Fees Payable:
-------------------------
(1) $5,000 Application Fee
(2) $45,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus $.004
per gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
<PAGE>
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement:
----------
(1) No Royalties on Gasoline and restaurant sales from January 1, 1994
through November 30, 1999
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
11. Franchisee:
-----------
Welsh, Inc.
P.O. Box 10725
Merrillville, Indiana 46411
Franchised Location:
-------------------
Petro:2 #80
Interstate-94 and E. Napier Road (Exit 30)
Benton Harbor, Michigan 49022
a. Franchise Agreement and Amendments: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of May 3, 1990 (expiration date: June
30, 1999)
(2) Supplement to Franchise Agreement dated as of May 3, 1990
(3) Amendment to Franchise Agreement dated as of November 25, 1991
(4) Second Amendment to Franchise Agreement dated March 15, 1995
(5) Billing Program dated as of September 24, 1991 (expiration date:
June 30, 1999)
(6) Arbitration Agreement dated as of November 25, 1991
<PAGE>
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the right-of-way of
the following described portions of United States Interstate Highways
94 and 196 (referred to herein as "I-94" and "I-196," respectively) and
extending in width one mile from either side of such highways:
(1) From the Franchised Location east along I-94 to the intersection
of I-196 and then north along I-196 to the western side of the
intersection of I-196 and I-94;
(2) From the Franchised Location east along I-94 to five miles beyond
the intersection of I-94 and Michigan Highway 127; and
(3) From the Franchised Location west along I-94 to the Michigan-
Indiana State line.
c. Deposits and Fees Payable:
-------------------------
(1) No Application Fee Paid
(2) $25,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of Fuel Sales (excluding bulk fuel sales);
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement:
---------
(1) Training Fee reduced to $25,000
(2) Initial Franchise Fee reduced to $25,000
(3) Royalty Fee Waived from opening for business through September 30,
1990 and after
<PAGE>
such period royalties shall not be payable with respect to the
first: 300,000 gallons of diesel fuel sold per month; $20,000 of
restaurant food sales per month; $25,000 of travel stores sales
per month; and $2,250 of scale income per month.
(4) Monthly Advertising and Marketing Fees shall first be payable
beginning the seventh month of opening of business
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
12. Franchisee:
----------
Rochelle Travel Plaza, Inc.
P.O. Box 317
Rochelle, Illinois 61068
Franchised Location:
-------------------
Petro Stopping Center
Interstate 39 and Illinois Highway 38
Rochelle, Illinois 61068
a. Franchise Agreement and Amendment: Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of March 29, 1991 (expiration date:
April 26, 2002)
(2) Supplement to Franchise Agreement dated March 28, 1991
(3) Second supplement to Franchise Agreement dated as of March 26,
1992
(4) Billing Program Agreement dated as of January 20, 1992 (expiration
date: April 26, 2002)
(5) Security Agreement dated March 28, 1991
(6) Guaranty dated as of March 28, 1991
<PAGE>
(7) Arbitration Agreement dated as of January 2, 1992
(8) Consent and Subordination Agreement dated April 10, 1991
(9) Consent, Subordination and Intercreditor Agreement dated as of
March 26, 1992
(10) Software License Agreement dated July 20, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the Franchised
Location and the right-of-way of the following described portions of
Interstate Highway 39 ("I-39"), U.S. Highway 51 ("U.S. 51"), Toll Road
5, and Interstate Highway 88 ("I-88") and extending in width one mile
from either side of such Highways:
(1) From the Franchise Location north along I-39 and U.S. 51 to the
Illinois-Wisconsin State line;
(2) From the Franchised Location south along I-39 and U.S. 51 to the
north side of Interchange Number 135 of U.S. 51 and Interstate
Highway 74 south of Bloomington, Illinois;
(3) From the interchange of I-39 and I-88/Toll Road 5 west to the east
side of the interchange of I-88 and Illinois State Highway 92 near
Joslin, Illinois; and
(4) From the interchange of I-39 and I-88/Toll Road 5 East to the west
side of the interchange of I-88/Toll Road 5 and Illinois State
Highway 31 near Aurora, Illinois.
c. Deposits and Fees Payable:
-------------------------
(1) $5,000 Application Fee
(2) $70,000 Initial Franchise Fee
<PAGE>
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement: None.
---------
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
13. Franchisee:
----------
Fargo Stopping Center, L.L.C.
P.O. Box 2129
Minot, North Dakota 58702
Franchised Location:
-------------------
Petro Stopping Center
Interstate Highway 94 at 45th Street and 19th Avenue
Fargo, North Dakota 58108
a. Franchise Agreement and Amendments Expiration Dates*:
-----------------------------------------------------
(1) Franchise Agreement dated as of January 31, 1994 (expiration
date: November 27, 2004)
(2) Supplement to Franchise Agreement dated January 31, 1994
(3) Billing Program Agreement dated as of January 31, 1994
(expiration date: November 27, 2004)
(4) Arbitration Agreement dated as of January 31, 1994
<PAGE>
(5) Security Agreement dated as of January 31, 1994
(6) Guaranty dated as of January 31, 1994
(7) Software License Agreement dated May 9, 1995
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the Franchised
Location and the right-of-way of the following described portions of
Interstate Highway 94 ("I-94"), and Interstate Highway 29 ("I-29") and
extending in width one mile from either side of such Highways:
(1) From the Franchised Location east along I-94 to the west side of
the interchange of Highway 71 and I-94 at I-94 exit number 127 near
Sauk Centre, Minnesota;
(2) From the Franchised Location west along I-94 to the east side of
the interchange of Highway 85 and I-94 at I-94 exit number 10 near
Belfield, North Dakota;
(3) From the interchange of I-94 and I-29 north along I-29 to the south
side of the interchange of Highway 81 and I-29 at I-29 exit number
203 near Joliette, North Dakota; and
(4) From the interchange of I-94 and I-29 south along I-29 to the north
side of the interchange of Highway 12 and I-29 at I-29 exit number
207 near Summit, South Dakota.
c. Deposits and Fees Payable:
-------------------------
(1) $25,000 Application Fee (credited against Initial Franchise Fee)
(2) $75,000 Initial Franchise Fee
<PAGE>
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus $.004
per gallon of Fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement:
---------
(1) Letter temporarily reducing royalty fees from: Non-fuel Sales to 1%
and Diesel and gasoline to .001% for the months of July, August,
September and October of 1995.
(2) Letter temporarily reducing royalty fees from: Non-fuel Sales to 1%
and Diesel and gasoline to .001% for the months of May, June, July
and August of 1996.
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
14. Franchisee:
----------
Highway Service Ventures, Inc.
100 Harbor Oak Drive, Suite 106
Ashland, Virginia 23005
Franchised Location:
-------------------
Petro Stopping Center #60
10200 Old Federal Road
Carnesville, George 30521
a. Franchise Agreement and Amendments; Expiration Date*:
---------------------------------------------------
(1) Franchise Agreement dated as of May 3, 1994 (expiration date:
January 15, 2005)
(2) Supplement to Franchise Agreement dated May 3, 1994
<PAGE>
(3) Billing Program Agreement dated as of May 3, 1994 (expiration
date: January 15, 2005)
(4) Arbitration Agreement dated as of May 3, 1994
(5) Security Agreement dated as of May 3, 1994
(6) Supplemental Acknowledgement, Consent and Agreement of Petro dated
April 3, 1994
b. Exclusive Territory:
-------------------
The Exclusive Territory covers an area including the Franchised
Location and the right-of-way of the following described portions of
Interstate Highway 85 ("I-85") and extending in width one mile from
either side of such highway.
(1) From the Franchised Location east along I-85 to the west side of
exit number 27 near Belmont, North Carolina.
(2) From the Franchised Location west along I-85 to the east side of
the interchange of I-85 and Loop I-285.
c. Deposits and Fees Payable:
-------------------------
(1) $25,000 Application Fee (credited against initial Franchise Fee)
(2) $100,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of fuel sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
<PAGE>
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement:
---------
(1) Letter temporarily reducing royalty fees for diesel fuel sales to
1% for the months of July, August, September and October of 1995
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
15. Franchisee:
----------
Bordentown Junction Truckstop
Junction Venture***
200 Four Falls Corporate Center, Suite 115
West Conshohocken, PA 19428
Franchised Location:
-------------------
Petro Stopping Center #14
Rising Sun Square Road
Bordentown, New Jersey 08505
a. Franchise Agreement and Amendments: Expiration Date*:
----------------------------------------------------
(1) Franchise Agreement dated as of December 29, 1995 (expiration
date: December 28, 2005)
(2) Billing Program Agreement dated as of April 17, 1996 (expiration
date: Dec. 28, 2005)
(3) Arbitration Agreement dated as of December 29, 1995
(4) Security Agreement dated as of December 29, 1995
(5) Letter Agreement dated December 29, 1995
(6) Subordination Agreement dated December 29, 1995
<PAGE>
b. Exclusive Territory:
-------------------
The exclusive Territory covers an area including the Franchised
Location and the following described portions.
(1) From the Franchised Location (Exit 7) South on the New Jersey
Turnpike (I-95) to the Delaware/New Jersey State Line at the
Delaware River
(2) From the Franchised Location (Exit 7) North on the New Jersey
Turnpike (I-95) to Exit 15E to Highway 1 and 9
(3) From Highway 130 South on I-295 to Exit 2 at the New Jersey
Turnpike (I-95)
(4) From Highway 206 North on Highway 130 to Highway 1
(5) From Highway 206 North on Highway 1 to I-287
(6) From Highway 206 South on Highway 130 to State Road 42
(7) From Highway 1 North on Highway 206 to I-78
(8) From the Franchised Location (Exit 7) South on Highway 206 to
Highway 30
c. Deposits and Fees Payable:
-------------------------
(1) $25,000 Application Fee waived
(2) $100,000 Initial Franchise Fee waived
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee (waived)
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up
<PAGE>
to .25% of monthly Nonfuel Gross Sales and Fuel Sales (grand
opening expenses waived)
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement:
---------
None.
e. Right of First Refusal**: Yes.
----------------------
16. Franchisee:
----------
135-80 Travel Plaza, Inc.
500 Graves Boulevard
Salina, Kansas 67401
Franchised Location:
-------------------
Petro Stopping Center
4600 South Lincoln
York, Nebraska 68467
a. Franchise Agreement and Amendments; Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of December 29, 1995 (expiration
date: December 16, 2005)
(2) First Amendment to Franchise Agreement dated March 22, 1996
(3) Billing Program Agreement dated as of December 29, 1995
(expiration date: December 16, 2005)
(4) Arbitration Agreement dated as of December 29, 1995
(5) Security Agreement dated as of December 29, 1995.
b. Exclusive Territory:
-------------------
The Exclusive Territory covers an area including the Franchised
Location and the following described portions.
(1) From the Franchised Location East on I-80 to Iowa Highway 71 at
Lorah, Iowa (Exit 60)
<PAGE>
(2) From the Franchised Location West on I-80 to Hershey, Nebraska
(Exit 164)
(3) From the Franchised Location South on Highway 81 to Concordia,
Kansas (which joins Petro:2 territory)
(4) From the Franchised Location North on Highway 81 to Highway 275 at
Norfolk, Nebraska
c. Deposits and Fees Payable:
-------------------------
(1) Application Fee waived
(2) $100,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sale and
Fuel Sales
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement: None.
---------
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
17. Franchisee:
----------
Big Ten Truckstop, Inc.
1 Grove Street
Dupont, Pennsylvania 18641
Franchised Location:
-------------------
Petro Stopping Center
1 Grove Street
Dupont, Pennsylvania 18641
<PAGE>
a. Franchise Agreement and Amendments; Expiration Dates*:
----------------------------------------------------
(1) Franchise Agreement dated as of June 7, 1996 (expiration date: Not
opened yet)
(2) First Amendment to Franchise Agreement dated June 7, 1996.
(3) Billing Program Agreement dated as of June 7, 1996 (expiration
date: Not opened yet)
(4) Arbitration Agreement dated as of June 7, 1996
(5) Security Agreement dated as of June 7, 1996
(6) Guaranty dated as of June 7, 1996
b. Exclusive Territory:
-------------------
The exclusive territory covers an area including the Franchised
Location and the following described portions:
(1) From the Franchised Location North on I-81 to New York State Line;
(2) From the Franchised Location South on I-81 to I-80 Interchange;
(3) From the Franchised Location South on Pennsylvania 380 to I-80;
(4) From the Franchised Location East on I-84 to Exit 11 at Port
Jervis, Pennsylvania;
(5) From the Franchised Location North on Toll Road 9 to I-81 at
Dickson City, Pennsylvania;
(6) From the Franchised Location South on Toll Road 9 to Exit 35 near
I-80.
<PAGE>
c. Deposits and Fees Payable:
-------------------------
(1) $25,000 Application Fee (credited against initial Franchise Fee)
(2) $100,000 Initial Franchise Fee
(3) Monthly Royalty Fee equal to 4.0% of Nonfuel Gross Sales plus
$.004 per gallon of fuel Sales (excluding bulk fuel sales)
(4) $50,000 Initial Training Fee
(5) Up to $10,000 for grand opening advertisement plus a Monthly
Advertising Fee of up to .25% of monthly Nonfuel Gross Sales and
Fuel Sales
d. Variations from Deposits and Fees Payable Pursuant to the Franchise
-------------------------------------------------------------------
Agreement: None.
---------
e. Right of First Refusal**: Yes.
----------------------
f. Option to Purchase Franchised Location Upon Termination**: Yes.
-------------------------------------------------------
<PAGE>
EXHIBIT 10.24
DISTRIBUTOR SALES AGREEMENT (BRANDED)
EXXON COMPANY, U.S.A.
CONTRACT and AGREEMENT made and entered into by and between Exxon Company,
U.S.A. (a division of Exxon Corporation), having an office and place of business
at 800 Bell, Houston, Texas 77002-7426 hereinafter called "Seller", and PETRO
-----
STOPPING CENTERS, L.P. having an office at 6080 SURETY DR., EL PASO, TX 79926,
- ---------------------- ----------------------------------
hereinafter called "Buyer".
1. PERIOD: Unless sooner terminated as provided elsewhere herein, this
Agreement shall be in full force and effect for the period of three (3) years
beginning on November 1, 1996, and ending on October 31, 1999.
---------------- ----------------
2. QUANTITIES:
(a) Seller agrees to sell to Buyer branded motor gasoline and branded
diesel of the kinds and in the quantities and under the terms and conditions
set forth herein and in the MOTOR FUEL PRODUCT SCHEDULE TO DISTRIBUTOR SALES
AGREEMENT (BRANDED) (hereinafter "Product Schedule") annexed hereto and made a
part hereof and Buyer agrees to purchase, receive and pay for the same on the
terms and conditions herein stated and in the Product Schedule.
(b) By mutual consent this Agreement may, from time to time, be amended by
the addition to or deletion herefrom of additional or revised Product
Schedule(s). Any such additional or revised Schedule(s) shall be marked as such
and signed by the duly authorized representatives of the parties and shall
thereupon be affixed to and become a part of this Agreement from and after the
effective date appearing on such additional or revised Schedule(s).
(c) The amount of any such products that Seller is obligated to sell to
Buyer is subject to all of Seller's other rights and/or obligations to: (A)
allocate supplies of available products; and (B) allocate products pursuant to
any regulation, direction, or request (whether valid or invalid) made by any
governmental authority or any person purporting to act for any governmental
authority.
3. PRICE: The price of the products covered by this Agreement shall be as
provided in the Product Schedule.
4. PAYMENT:
(a) Unless Seller notifies Buyer otherwise, Buyer will pay Seller for any
products and other charges by electronic funds transfer at the time Seller
designates. Seller has the ongoing right to periodically give Buyer notice of
a different method, time, or place of paying for any products or other charges.
(b) Nothing herein shall be construed as obligating Seller to extend any
credit to Buyer. If Seller in its sole determination does elect to extend
credit to Buyer, such extension of credit shall be made only in writing and on
the following terms and conditions:
(1) Method of payment shall be electronic funds transfer, unless
otherwise specified by Seller, at or to the payment location
specified by Seller.
(2) In the event Seller does not receive payment on or before the due
date, Seller may impose and Buyer will pay, a late payment charge
for each month (prorated for each partial month) that passes
between the due date and the date Seller receives payment. This
late payment charge will be in addition to Seller's other
remedies, and will not exceed the lesser of (A) the maximum
allowed by law, or (B) a fixed rate that may vary from state to
state in Seller's discretion, but that will not be less than
eighteen per cent (18%) per annum prorated over the period that
credit is outstanding.
(3) Seller will furnish to Buyer statements of Buyer's account on a
monthly basis. Payment of any such bills shall not prejudice the
right of Buyer to question the correctness thereof; provided
however, all bills and statements rendered to Buyer by Seller
during any month
-1-
<PAGE>
shall conclusively be presumed to be true and correct after
ninety (90) days following the end of any such month, unless
within said ninety (90) day period Buyer delivers to Seller's
accounting office issuing said statement written exception
thereto setting forth the item or items questioned and the basis
therefore. Time is of the essence in complying with this
provision.
(4) In the event there are additional business transactions between
Buyer and Seller including without limitation those relating to
(i) credit sales of products other than those identified herein,
(ii) promissory notes, or (iii) real estate, unless it is clearly
indicated in writing by Buyer as to how payments received by
Seller from Buyer are to be applied, then such payments shall be
applied by Seller in the following order of priority: (i) trade
accounts, (ii) promissory notes, (iii) rentals or other amounts
due under any other agreement or transaction.
(5) Seller reserves the right to withdraw such credit immediately at
any time on giving to Buyer notice thereof. In the event credit
is withdrawn, all amounts then due and owning shall become
payable, and all future sales by Seller to Buyer shall be for
cash (or at Seller's option certified or cashier's check, money
order, electronic funds transfer, or other means approved by
Seller).
(6) Seller has the right, but not the obligation, to offset any
amounts owed by Buyer to Seller, whether arising from the sale of
products under this Agreement, or arising under any other
agreement or business transaction between the parties.
(c) When Buyer takes delivery of any product sold hereunder, Buyer
represents to Seller that Buyer is solvent and able to pay for such product.
Additional evidence of Buyer's solvency shall be the written confirmation of
Buyer's purchase.
5. CARD ADMINISTRATION:
(a) Seller may issue Seller Cards and process and pay for Seller Card
sales tickets submitted to Seller in accordance with the terms of the applicable
card guide. Seller may authorize third party issuers (Third Party Issuer(s)) to
issue Seller Cards any other cards and process and pay Buyer for Seller Cards
and other card sales tickets submitted to Third Party Issuer in accordance with
the terms of an applicable card guide or agreement. Seller has the right, but
not the obligation, to change at any time its methods or terms of issuing, or
authorizing the issuance of, Seller Cards and other cards and its methods or
terms of processing and paying, or authorizing the processing and paying of,
Seller Cards and other card sales tickets. Nothing in this Agreement obligates
Seller or Third Party Issuer to issue Seller Cards and other cards or to process
for payment Seller Cards and other card sales tickets.
(b) Buyer agrees to be bound by and comply with all terms and conditions of
any card guide or agreement under which Seller or Third Party Issuer agrees to
process and pay for Seller Cards and other card sales tickets. The terms of such
card guide or agreement may be amended and/or supplemented at any time by Seller
or Third Party Issuer(s).
(c) If Third Party Issuer agrees to pay Buyer for Seller Card or other card
sales tickets submitted for payment in accordance with the terms of the
applicable card guide or agreement, Buyer will look solely to third Party Issuer
and not to Seller for such payment. Should Seller elect to or otherwise pay all
or any portion of any card sales ticket charged back by Third Party Issuer to
Buyer, upon demand from Seller, Buyer shall immediately reimburse Seller for any
such payments made by Seller.
(d) Seller has the right, but not the obligation, to offset any amounts
owned by Seller to Buyer against any amounts owed by Buyer to Seller, whether
arising under a contract or from any other business transaction between the
parties. Seller has the right, but not the obligation, to instruct a Third Party
Issuer to pay Seller rather than Buyer for Seller Card and other card sales
tickets submitted by Buyer to Third Party Issuer, to apply against the payment
of any amounts owed by Buyer to Seller whether arising under a contract or from
any other business transaction between the parties.
(e) If Buyer requests Seller or Third Party Issuer to accept assignment of
credit or debit card tickets from, and make return payment directly to Buyer's
customers, and Seller or Third Party Issuer agrees to accept such assignments,
Buyer agrees that such assignments shall be treated for all purposes as
-2-
<PAGE>
if assigned directly by Buyer, that chargebacks of reassigned credit or debit
sales tickets received from Buyer's customers shall be the responsibility of
Buyer, and that such chargebacks may be deducted from sums owed by Seller or
Third Party Issuer to Buyer.
6. DELIVERY: Delivery of the product(s) covered by this agreement and passage
of title and risk of loss shall be as stated in the applicable Product Schedule.
7. TAXES: In addition to the price charged by Seller for products purchased
hereunder, Buyer will pay to Seller any foreign or domestic tax, fee or other
charge (except taxes based on income), whether or not of the same class or kind
as those listed below, whenever imposed or assessed, that any municipal, county,
state, federal or other laws (now in effect or hereafter enacted) directly or
indirectly require Seller or Seller's suppliers to collect or pay related to the
production, manufacturer, sales, inspection, transport, storage, delivery, or
use of products covered by this Agreement. This charges include, without
limitation (A) duty taxes; (B) sales taxes; (C) excise taxes; and (D) taxes on
or measured by gross receipts.
8. FAILURE TO PERFORM:
(a) Any delays in or failure of performance of either party hereto shall
not constitute default hereunder or give rise to any claims for damages if and
to the extent that such delay or failure is caused by occurrences beyond the
control of the party affected, including, but not limited to, acts of God or the
public enemy; expropriation or confiscation of facilities; compliance with any
order or request of any governmental authority; acts of war, rebellion or
sabotage or damage resulting therefrom; embargoes or other import or export
restrictions; fires, floods, explosions, accidents, or breakdowns; riots,
strikes or other concerted acts of workers, whether direct or indirect;
reduction of transportation capacity; inability to obtain necessary industrial
supplies, energy, or equipment; or any other causes whether or not of the same
class or kind as those specifically above named which are not within the control
of the party affected and which, by the exercise of reasonable diligence, said
party is unable to prevent or provide against. A party whose performance is
affected by any of the causes set forth in the preceding sentence shall give
prompt written notice thereof to the other party.
(b) If for any reason Seller's supplies of product deliverable under this
Agreement are inadequate to meet Seller's contract obligations to its customers
for such products, or if Seller determines, in its sole discretion, in
consideration of the uncertainties of worldwide raw material availability or
refining capacity limitations or other factors, that it is appropriate to impose
a plan of allocation (by grade or otherwise), then Seller shall have the right
to impose such a plan and the right to include one or more of the following:
(1) Seller's "customers" for products of the kind deliverable
hereunder shall be deemed to include (i) purchasers pursuant to
current contracts, (ii) purchasers whose contracts have expired where
Seller, at its sole option, determines to continue sales, (iii)
purchasers to whom sales have been made on a regular and recurring
basis to whom contracts have not been submitted and (iv) new customers
to whom Seller determines to commence selling at its sole option.
(2) Seller shall have the right to give preference in allocation to
those customers whose needs (including resellers who sell for similar
needs) are related to (i) protection of life or health, (ii)
production and transportation of food and energy, (iii) mass
transportation customers, and (iv) national defense.
(3) Seller's allocation plans may be put into effect on such
geographical basis (including treating one geographic area differently
than another one) as Seller may determine, without regard for the
specific inventory at the place or places from which products
deliverable hereunder are normally produced, shipped or delivered.
(4) Seller shall have sole discretion to determine the proportions in
which it will manufacture various products from the raw material
available to it and to determine the level of inventories which it
maintains for all raw materials and all products. Seller shall have
no obligation to purchase or otherwise obtain additional products of
the kind deliverable hereunder or raw
-3-
<PAGE>
materials from which such products are derived, and Seller shall have
complete discretion as to the disposition of any raw materials or
products which Seller may buy.
(5) Seller's allocation plans shall be applied after making provisions
for Seller's own requirements for products of the kind deliverable
hereunder. In the context of this subsection "Seller" shall include
Exxon Corporation and all of its divisions, subsidiaries, and
affiliates whether wholly or partially controlled and whether domestic
or foreign.
(c) Seller shall be under no obligation to make deliveries hereunder at any
time when in Seller's sole judgment it has reason to believe that making of such
delivery would be likely to cause strikes to be called against it or cause its
properties to be picketed.
(d) Seller shall not be required to make up deliveries omitted on account
of any of the causes set forth in this Section.
(e) Nothing in this Section shall excuse Buyer from making payment when
due for deliveries under this Agreement.
(f) Seller shall be under no obligation to make deliveries hereunder at
any time when in Seller's sole judgment Buyer's premises or equipment, including
tanks, are unsafe for the delivery of product(s). Buyer accepts full
responsibility for all damages to any person or property in any way resulting
from Buyer's failure to provide safe premises and equipment, including tanks
safe and fit for the storage or handling of motor fuels, whether such failure is
known or unknown to Seller or Seller's representative, and Buyer indemnifies
and holds Seller harmless with respect to any such damages or any cause of
action arising therefrom.
9. PRICE ADJUSTMENT: Buyer shall pay to Seller in addition to the prices
provided for herein any foreign or domestic duty, tax, sales tax, excise tax,
gross receipts tax, fee or other charge, whether or not for the same class or
kind, now in effect or thereafter imposed or assessed (but exclusive of taxes
based on net income) which Seller or Seller's supplier, direct or indirect, may
be required by any municipal, state, federal or foreign government law, rule,
regulation or order, to collect or pay with respect to the production,
manufacture, sale, transportation, storage, delivery or use of products sold
hereunder, and which is not otherwise given effect in Seller's applicable
prices.
10. NEW OR CHANGED REGULATIONS: The parties are entering into this Agreement
in reliance on the regulations, law and arrangements with governments or
governmental instrumentalities (hereinafter called "regulations") in effect on
the date of execution by Seller affecting the products (including the raw
materials, manufacturing or distribution facilities used therefor) sold
hereunder insofar as said "regulations" affect Buyer, Seller or Seller's
suppliers. If the effect of any change in any regulation or of any new
"regulation" (1) is not covered by any other provision of this Agreement, and
(2) in the affected party's judgment, either (a) has an adverse effect upon the
party of (or if Seller, upon Seller's suppliers) or (b) increases the risk to
the party of performance under this Agreement, the affected party may request
renegotiation of the terms of this Agreement. The affected party has the right
to terminate this Agreement on written notice, effective ninety (90) days after
the request for renegotiation, if the renegotiation is not satisfactorily
completed. Such right to request renegotiation or, upon failure to agree, to
terminate, shall without limitation also be available if "regulations":
(a) Inhibit Seller from freely establishing, by increasing or decreasing,
prices of products covered by this Agreement.
(b) Prohibit Seller from collecting the price adjustment provided for
above under "Price Adjustment";
(c) Regulate the prices or recipients of products covered by this
Agreement; or
(d) Affect Seller's liability.
11. TRADEMARKS:
(a) Buyer is permitted to display Seller's trademarks solely to designate
the origin of said products and Buyer agrees that petroleum products of other
(or unbranded petroleum products purchased from Seller) will not be sold by
Buyer under any trade name, trademark, trade dress, brand name, label, insignia,
-4-
<PAGE>
symbol, or imprint owned by Seller or used by Seller in its business
(collectively "Exxon Identification"). Upon termination of this Agreement or
prior thereto upon demand by Seller, Buyer shall discontinue the posting,
mounting, display or other use of Exxon identification except only to the extent
they appear as labels or identification of products manufactured or sold by
Seller and still in the containers or packages designed and furnished by Seller.
Buyer is not a licensee of Seller's trademark. Without prior written
authorization, Buyer shall not mix, commingle, adulterate, or otherwise change
the composition of any of the products purchased hereunder and resold by Buyer
under said Exxon Identification. Seller is hereby given the right to examine at
any time, and from time to time, the contents of Buyer's tanks or containers in
which said product(s) purchased hereunder are stored and to take samples
therefrom, and if in the opinion of Seller any samples thus taken are not said
product(s) and in the condition in which delivered by Seller to Buyer, then
Seller may at its option cancel and terminate this Agreement. If there shall be
posted, mounted, or otherwise displayed on or in connection with the premises
any sign, poster, placard, plate, device or form of advertising matter whether
or not received from Seller, consisting in whole or in part of the name of
Seller or any Exxon Identification, Buyer agrees at all times to display same
properly and not to diminish, dilute, denigrate, or otherwise adversely affect
same and to discontinue the posting, mounting or display or same immediately
upon Buyer's ceasing to sell Seller's branded motor fuels (or other branded
products of Seller) or in any event upon demand by Seller. Buyer further agrees
to take no action which will diminish or dilute the value of such trademarks or
other identifications owned or used by the Seller.
(b) Buyer or Buyer's customers shall not sell non-Exxon branded motor
gasoline under any Exxon-identified canopy or at any fueling island where Buyer
or Buyer's customer is selling Exxon branded motor gasoline. Provided, however,
that "non-Exxon branded motor gasoline" as used in the preceding sentence shall
not be construed to apply to gasohol or other synthetic motor fuels of similar
usability, to the extent provided for in the Gasohol Competition Act of 1980,
Pub. L. 96-493.
(c) Without affecting Buyer's obligations under Section 11(b) above, if
Buyer offers non-Exxon products for sale, Buyer agrees to protect the identity
of Exxon branded products and Exxon's trademarks by all reasonable methods which
would prevent customer confusion or misinformation. Buyer agrees to conform to
Exxon's deidentification requirements, as same may be revised from time to time,
including but not limited to posting of Exxon approved signs which clearly
distinguish Exxon products from non-Exxon products, disclaiming any product
liability of Seller for damage resulting from use of non-Exxon products, and
removing or covering any sign which may mislead, confuse, or misinform some
customers or reduce their goodwill toward the Exxon Identification. In
addition, Buyer agrees to comply with any additional steps beyond the Exxon
deidentification requirements required by any applicable law, ordinance or
regulation regarding the labeling of petroleum products.
(d) In furtherance of its obligations as set forth in the preceding
paragraphs of this Section, Buyer agrees that it will for itself, and as to
any of its customers to whom Seller's trademark symbol has been provided or who
is permitted the display of such trademark or other Exxon Identification require
of such customers that they will, while identifying the source of the products
sold at their premise(s), or any location operated directly by Buyer, with
Seller's trademark or other Exxon Identification comply with the foregoing, and
will incorporate in its arrangements with such customers the undertakings
provided in this section and will assist in the enforcement thereof. Such
assistance includes, but is not limited to the authorization to Seller to
commence legal proceedings in Buyer's name, and at Buyer's expense, for the
purposes of enforcing Buyer's obligations in this paragraph. Buyer further
agrees to notify immediately Seller of any customers failing to comply with this
section.
(e) Buyer shall have neither the right to use or display at marinas, nor
the right to authorize or permit the use or display at marinas, Exxon
Identification in connection with the sale of products purchased hereunder.
(f) To permit Seller to carry out its right and obligation to protect its
trademark from diminution, dilution, or destruction by misuse of failure to whom
permission to display it has been granted hereunder, Buyer agrees that upon
request by Seller (but not more frequently than once each year) it will provide
Seller with a list of the names and addresses to which Buyer has provided
Seller's trademark symbol or other Exxon Identification and where such locations
are displaying Seller's trademark or other
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<PAGE>
Exxon Identification of Seller as the source of the products sold, it being
understood and agreed that a breach of any provision of this Section 11 is an
event which is relevant to the franchise relationship as defined in the
Petroleum Marketing Practices Act (15 U.S.C.A. 2801 et seq.) and as a result of
which termination of the franchise or nonrenewal of the franchise relationship
as defined is reasonable.
(g) If Buyer, for whatever reason, ceases to display or authorize the
display of Exxon Identification at any location, then Buyer will notify Seller
in writing within thirty (30) days of that event.
12. MARKET DEVELOPMENT AND REPRESENTATION:
(a) A primary business purpose of Seller is to optimize effective and
efficient distribution and representation of its branded motor fuel products in
the interbrand motor fuel market through planned market development and image
improvement. In furtherance of this business purpose, Buyer and Seller agree as
follows:
(i) While it is not a requirement of this Agreement, Seller
believes that it is important for Buyer to have, and
periodically update, a market development plan. The plan
should provide for the selection and acquisition of "key
sites" and "special opportunity sites" (both as defined from
time to time by Seller) and the development of optimal
facilities, effective operating practices, and the necessary
financial and management resources. If Buyer, or key person of
Buyer, has not attended a market development seminar given by
Seller, Buyer, or key person of Buyer will attend any such
seminar if requested to do so by Seller.
(ii) Unless pursuant to specific prior written authorization from
Seller, Buyer agrees not to display, or to authorize or permit
Buyer's customers to display Exxon Identification in
connection with the sale of motor fuel at any retail motor
fuel store. This subparagraph (ii) shall not apply to Exxon
branded motor fuel stores validly operated by Buyer on March
31, 1987, or to stores at which Buyer validly authorized
Buyer's customers to display Exxon Identification on such
date.
(iii) Unless pursuant to specific prior written authorization from
Seller, Buyer shall not, directly or indirectly, sell or
supply, or cause to be sold or supplied, any motor fuels
purchased from Seller to any person or entity currently having
a branded motor fuels supply agreement directly with Seller,
which supply agreement pertains to a specific retail outlet.
The reference to "entity" in the preceding sentence shall be
deemed to include any other entity owned or controlled by the
person or entity having the aforementioned supply agreement
directly with Seller.
(b) Buyer shall cause all retail stores which Buyer supplies with Seller's
branded motor fuels to meet the following minimum conditions, or Buyer shall
lose the right to use or display Exxon Identification, or to grant to its
customers the right to use or display Exxon Identification, at any such store.
(i) Paved driveways with safe and good ingress and egress;
(ii) Permanent building which is structurally sound and complies
with all fire, building and zoning codes and ordinances;
(iii) Clean premises free of debris, trash, and fire hazards;
(iv) Modern restrooms for men and women available to the general
public;
(v) Posting, at all times, of actual motor fuel prices, in
numerals, in all RID price sign systems located on the
premises.
(vi) Compliance with applicable standards as described in
Attachment A-Facility Requirements to Distributor Sales
Agreement (Branded), which is incorporated herein and made a
part of this Agreement.
13. PROMOTION OF PRODUCTS. Buyer agrees to diligently promote the sale of
gasoline and other motor fuel purchased hereunder. With respect to Buyer's
customers who are permitted in accordance with Section 11 to display Exxon
Identification, Buyer agrees to include in Buyer's arrangements with such
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<PAGE>
customers, the requirements to provide at such customer's premises through the
underground storage and dispensing equipment a representative offering of Exxon
branded motor fuel at all times when such customers display Exxon
Identification. A representative offering of Exxon branded motor fuel is defined
as a) the offering of three grades of Exxon branded gasoline or other motor fuel
if Buyer offers four or more grades of gasoline or other motor fuel at the
premises; or b) offering two grades of Exxon branded gasoline or other motor
fuel if Buyer offers three grades of gasoline or other motor fuel at the
premises, or c) as offering one grade of Exxon branded motor gasoline or other
motor fuel if Buyer offers two or fewer grades of gasoline or other motor fuel
at the premises. Buyer agrees to undertake the enforcement of such requirement.
Buyer further agrees to comply with this same requirement at any location
operated directly by Buyer.
14. CUSTOMER SERVICE AND COMPLAINTS: While using any Exxon Identification of
Seller, as set forth in Section 11, Buyer agrees:
(a) To render appropriate, prompt, efficient, and courteous service at the
premises to Buyer's customers for such products, to respond expeditiously to all
complaints of such customers, making fair adjustment when appropriate, and
otherwise conduct Buyer's business in such products in a fair and ethical manner
and maintain the premises' facilities, all in a manner which will foster
customer acceptance of and desire for the products sold by Seller to Buyer;
(b) To provide sufficiently qualified and neatly dressed attendants,
uniformed as appropriate to render first class service to customers;
(c) To keep the rest rooms clean, orderly, sanitary and adequately
furnished with rest room supplies; and
(d) To assist in maintaining a high level of customer acceptance of the
Seller's trademarks by keeping the premises open for dispensing of products
associated with such trademark during such hours each day and days a week as are
reasonable considering customer convenience, competitive conditions and economic
consequences to Buyer.
Buyer also agrees that as to any of its customers to whom it sells product
purchased from Seller hereunder and to whom Exxon Identification has been
provided or who is permitted the use of such Exxon Identification, Buyer will
include in its arrangements with such customers the undertaking provided in this
section and will undertake the enforcement thereof. Buyer further agrees that
Seller may revoke the right of Buyer to display, or permit the display at
Buyer's customers, Exxon Identification at any location which, after reasonable
notice by Seller to Buyer to cure, continues to be in violation of this Section
14.
15. DETERMINATION OF QUANTITY AND QUALITY: The quantity and quality of products
sold hereunder shall be for all purposes conclusively deemed to be the quantity
and quality set forth in Seller's documents of delivery unless within seven (7)
days of the date of delivery Buyer delivers to Seller written notice of any
claimed shortage in quantity or claimed deviation in quality. Time is of the
essence in complying with this provision.
16. QUALITY, GRADE, SPECIFICATION, OR NAME OF PRODUCT: Seller shall have the
right at its sole discretion at any time during the life of this Agreement to
change, alter, amend or eliminate any of the grades, trade names, trademarks or
brands of petroleum products covered by this Agreement. Seller may also, in its
sole discretion, change or alter the quality of specification of any of the
products covered by this Agreement. If any such change or alteration materially
affects the performance of the products or need of Buyer therefor for the
purposes intended by Buyer, Buyer may terminate this Agreement as to any
products so affected on thirty (30) days' prior written notice to Seller;
however, Buyer may not terminate this Agreement for any change in quality or
specification of any said products resulting from compliance with governmental
regulations. Seller shall give Buyer written notice of discontinuance of the
manufacture of any products covered by this Agreement. The Agreement shall
terminate as to such products when such notice is effective. Seller shall have
the right to enter the premises of the Buyer or of any of the Buyer's customers
who have purchased product sold to Buyer under this Agreement and being offered
for sale by such customer under Exxon Identification during normal business
hours for the purpose of obtaining a
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<PAGE>
sample or samples of any product available for the sale under Exxon
Identification or other Exxon Identification by paying Buyer or customer of
Buyer the current retail price therefor. Buyer will include in its arrangements
with its customers the right of Seller to enter the premises of such customers
for the sole purpose stated in the preceding sentence of this paragraph and
agrees to assist in the enforcement thereof.
17. ASSIGNMENT: This Agreement shall not be transferred or assigned by Buyer in
whole or in part, directly or indirectly. Seller may assign this Agreement in
whole or in part upon ten (10) days prior written notice to Buyer.
18. WAIVER: No waiver by either party of any breach of any of the covenants or
conditions herein contained to be performed by the other party shall be
construed as a waiver of any succeeding breach of the same or any other covenant
or conditions. All waivers must be in writing.
19. LAWS:
(a) Buyer agrees that in receiving, storing, handling, offering for sale,
selling, delivering for use or using itself products purchased from Seller under
this Agreement, Buyer will comply, and instruct his employees with respect to
same, with all applicable federal, state, county and local laws, statutes,
ordinances, codes, regulations, rules, orders, and permits.
(b) Except as provided in Section 19(c), Buyer will indemnify and hold
Seller, its employees, agents, successors, and assigns, from and against any and
all expenses, costs (including, without limitation, professional fees),
penalties, fines (without regard to the amount of such fines), liabilities,
claims, demands and causes of action, at law or in equity (including,
without limitation, any arising out of the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA), the Resource Conservation and Recovery
Act (RCRA), or the Clean Air Act) for Buyer's failure to comply with Section
19(a), and such failure to Buyer to comply shall also entitle Seller to
terminate this Agreement.
(c) Notwithstanding the terms of Section 19(b), it is the intention of the
parties that Buyer will fulfill its obligations set forth in Section 19(b), EVEN
IF SELLER ITS AGENTS AND/OR EMPLOYEES ARE JOINTLY OR CONCURRENTLY NEGLIGENT
AND/OR JOINTLY OR CONCURRENTLY ACT WITH WILLFUL MISCONDUCT, but not if Seller,
its agents and/or employees are solely negligent and/or solely act with willful
misconduct.
(d) If at any time Seller determines that due to governmental regulations,
it is unable to increase the price of any of the products deliverable under this
Agreement by an amount which is sufficient in Seller's judgment to reflect
increase in either (a) the cost of such products(s) to Seller or Seller's
supplier or (b) the fair market value of such product(s), which have occurred
since the date of this Agreement or the date of the last increase in the price
of such product(s) whichever is later, Seller may cancel this Agreement upon
thirty (30) days written notice to Buyer, or may suspend this Agreement while
such limitation is in effect.
20. NOTICES: All written notices required or permitted to be given by this
Agreement shall be deemed to be duly given if delivered personally or sent by
certified mail to Seller or to Buyer, as the case may be, at the address set
forth above or to such other address as may be furnished by either party to the
other in writing in accordance with the provisions of this Section. The date of
mailing shall be deemed the date of giving such notice, except for notice of
change of address, which must be received to be effective.
21. TERMINATION:
(a) This agreement shall terminate upon expiration of term stated in
Section 1.
(b) This Agreement may be terminated by Seller:
(1) Upon assignment of the agreement by Buyer contrary to Section 17.
(2) If Buyer or any of its key persons, managers, or stockholders makes
any material false or misleading statement or representation (by
act or by omission) which induces Seller to enter into this
Agreement, or which is relevant to the relationship between the
parties hereto;
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<PAGE>
(3) If Buyer becomes insolvent;
(4) If possession of the business location(s) of the Buyer is
interrupted by an act of any government or agency thereof;
(5) If Buyer fails to pay in a timely manner any sums when due
hereunder;
(6) If Buyer fails to purchase any products covered by this agreement
during any consecutive three month period;
(7) If Buyer defaults in any of its obligations under this Agreement;
(8) If Buyer is declared incompetent to manage his property or affairs
by any court, or if Buyer is mentally or physically disabled for
three (3) months or more to the extent that Buyer is unable to
provide for the continued proper operation of the business of the
Buyer;
(9) Under the circumstances described in causes for termination by
Seller in any Section of this agreement;
(10) If Buyer dies;
(11) If Buyer or any of its key persons, managers, or stockholders
engages in fraud or criminal misconduct relevant to the operation
of the business of the Buyer;
(12) If Buyer or any of it key persons, managers, or stockholders is
convicted of felony or of a misdemeanor involving fraud, moral
turpitude or commercial dishonesty, whether or not the crime arose
from the operation of the business of the Buyer; or
(13) If there occurs any other circumstance under which termination of a
franchise is permitted under the provisions of the Petroleum
Marketing Practices Act (15 U.S.C.A. 2801 et seq.)
(14) Seller loses the right to grant the right to use the EXXON
trademark;
(c) If Seller has cause to believe that Buyer has engaged to fraudulent,
unscrupulous or unethical business practices (which shall include but not be
limited to practices forbidden by federal, state or local laws or regulations),
Seller may, at its sole discretion, give Buyer written notice of its belief.
Following the receipt of such notice, Buyer shall be given reasonable
opportunity to discuss the matter with Seller's representatives. In following
such discussions (or reasonable opportunity therefor) and after such
investigation of the matter as is reasonable under the circumstances, Seller
reaches a good faith conclusion that Buyer has engaged in one or more such
practices, Seller shall have the right to terminate this Agreement.
(d) Any termination of this Agreement shall be preceded by such notice from
Seller as may be required by law.
(e) Upon the expiration of the term hereof or upon termination hereof,
Seller shall have the right, at its option, to enter upon any premises at which
the Exxon Identification is displayed, and to remove, paint out, or obliterate
any signs, symbols or colors on said premises or on the buildings or equipment
thereof which in Seller's opinion would lead a purchaser to believe that
Seller's products are being offered for sale at the premises.
(f) Termination of this Agreement by either party for any reason shall not
relieve the parties of any obligation theretofore accrued under this Agreement.
22. ACCORD: The parties to this Agreement have discussed the provisions herein
and find them fair and mutually satisfactory; and further agree that in all
respects the provisions are reasonable and of material significance to the
relationship of the parties hereunder, and that any breach of a provision by
either party hereto or a failure to carry out said provisions in good faith
shall conclusively be deemed to be substantial.
23. NATURE OF AND MODIFICATION OF AGREEMENT:
(a) In consideration of the granting and execution of this Agreement, the
parties understand and agree that they are not contractually obligated to extend
or renew in any way the period or terms of this Agreement, that this Agreement
shall not be considered or deemed to be any form of "joint venture" or
"partnership" at the premise(s) of Buyer or elsewhere.
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<PAGE>
(b) Buyer agrees to provide sixty (60) days' prior written notice of any
change in the name or legal form of buyer.
(c) This Agreement may be modified only by a writing signed by both of the
parties or their duly authorized agent.
24. COMPLIANCE WITH LAWS: SEVERABILITY OF PROVISIONS: Both parties expressly
agree that it is the intention of neither party to violate statutory or common
law and that if any section, sentence, paragraph, clause or combination of same
is in violation of any law, such sentences, paragraphs, clauses or combination
of same shall be inoperative and the remainder of this Agreement shall remain
binding upon the parties hereto unless in the judgment of either party hereto,
the remaining portions hereof are inadequate to properly define the rights and
obligations of the parties, in which event such party shall have the right, upon
making such determination, to thereafter terminate this Agreement upon the
notice to the other.
25. EXPRESS WARRANTIES: EXCLUSION OF OTHER WARRANTIES: Seller warrants that the
product(s) supplied hereunder will conform to the promises and affirmations of
fact made in Seller's current technical literature and printed advertisements
related specifically to such product(s); that it will convey good title to the
product(s) supplied hereunder, free of all liens, and that the products supplied
hereunder meet such specifications as have been expressly made a part of this
Agreement. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
WARRANTIES, WHETHER WRITTEN, ORAL OR IMPLIED. THE WARRANTY OF MERCHANTABILITY,
IN OTHER RESPECTS THAN EXPRESSLY SET FORTH HEREIN, AND WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, IN OTHER RESPECTS THAN EXPRESSLY SET FORTH HEREIN, ARE
EXPRESSLY EXCLUDED AND DISCLAIMED.
26. ENTIRE AGREEMENT: This writing is intended by the parties to be the final,
complete and exclusive statement of this agreement about the matters covered
herein. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR WARRANTIES
AFFECTING IT.
27. DAMAGES: NO CLAIM SHALL BE MADE UNDER THIS AGREEMENT FOR SPECIAL, OR
CONSEQUENTIAL DAMAGES, EXCEPT AS PROVIDED OTHERWISE BY LAW.
28. PRIOR AGREEMENT: This Agreement cancels and supersedes any prior
agreements between the parties thereto, covering the purchase and sale of
product(s) covered by this Agreement.
29. QUALITY ASSURANCE PROCEDURES: Seller has provided Buyer a copy of "QUALITY
CONTROL PROCEDURES FOR UNLEADED GASOLINE." Buyer agrees that this document and
any revisions thereof provided to Buyer by Seller shall be a part of this
Agreement and Buyer further agrees in the storage, handling, sale and dispensing
of unleaded gasoline to comply with the procedures contained in this document
and in any revisions thereof. In the event Buyer fails to comply with this
provision, Seller may engage the services of an outside contract firm to perform
sampling, testing and reporting. The cost of such outside contract firm shall be
borne by Buyer.
30. ATTORNEYS FEES: If Buyer fails to pay any amount due under this Agreement
or takes any action not requested in writing by Seller for which Buyer's
customers bring a claim or lawsuit against Seller, Buyer agrees to pay Seller's
reasonable costs and attorneys fees thereby expended in Seller's pursuit or
defense of such matters.
31. SAFETY AND HEALTH INFORMATION: Seller has furnished to Buyer information
(including Material Safety Data Sheet(s)) concerning the safety and health
aspects of products and/or containers for such products sold to Buyer hereunder,
including safety and health warnings. Buyer acknowledges receipt of such
information and agrees to communicate such warnings and information to all
persons Buyer can
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<PAGE>
reasonably foresee may be exposed to or may handle such products and/or
containers, including, but not limited to, Buyer's employees, agents,
contractors and customers.
32. KEY PERSON CLAUSE: If Buyer is a corporation or a partnership, it agrees to
execute the Key Person Clause To Distributor Sales Agreement (Branded) attached
hereto and incorporated herein.
EXECUTED by Buyer and Seller on the date indicated for each signature.
Date: /s/ BARBARA WHITTENTON Buyer: PETRO STOPPING CENTERS, L.P.
------------------------- ------------------------------
10-2-96 By: (X)/s/ J.A. CARDWELL
------------------------- ---------------------------------
Buyer
CEO
---------------------------------
Office or Title
Date: 10-2-96
-------------------------------
EXXON COMPANY, U.S.A. (Seller)
a division of Exxon Corporation
Date: 11-21-96 By: /s/ D.L. MITCHELL
------------------------- ---------------------------------
Area Manager
/s/ T.N. KIEHNE
------------------------- Date: 11-21-96
Witness -------------------------------
<PAGE>
EXHIBIT 10.26
AMENDED SPLIT DOLLAR LIFE INSURANCE AGREEMENT
---------------------------------------------
THIS AGREEMENT (the "Agreement"), made effective as of May 1, 1995, by and
between PETRO STOPPING CENTERS, L.P., a Delaware limited partnership ("PETRO")
and successor in interest to PETRO PSC, L.P., a Delaware limited partnership
("PETRO PSC, L.P."), JAMES A. CARDWELL, JR., Trustee of the JAMES A. AND EVONNE
CARDWELL TRUST NUMBER TWO, as amended and restated and dated December 28, 1994
("TRUSTEE OF TRUST TWO"), and JAMES A. CARDWELL, JR., Trustee of the JAMES A.
CARDWELL TRUST NO. THREE, ("TRUSTEE OF TRUST THREE"), shall be upon the
following terms and conditions:
R E C I T A L S:
---------------
1. PETRO highly values the efforts, abilities and accomplishments of J.A.
CARDWELL (sometimes referred to herein as "EMPLOYEE").
2. EMPLOYEE is one of the highly compensated employees of PETRO.
3. PETRO, as an inducement of continued employment, wishes to assist
EMPLOYEE with his personal life insurance program and family estate planning by
making funds available for the payment of premiums on his life insurance
policies.
4. TRUSTEE OF TRUST THREE is made a party to and joins in this Agreement
for the purpose of evidencing his agreement: (i) that the John Hancock Policy,
as defined below, will remain subject to an existing Collateral Assignment by
TRUSTEE OF TRUST TWO in favor of PETRO PSC, L.P., as amended; and (ii) if
necessary, to lend funds to TRUSTEE OF TRUST TWO in order to facilitate the
repayment of the obligations that the JAMES A. AND EVONNE CARDWELL TRUST NUMBER
TWO ("TRUST NUMBER TWO") owes to PETRO for premiums paid by either PETRO or
PETRO PSC, L.P. with respect to all life insurance policies insuring the lives
of J.A. CARDWELL and EVONNE CARDWELL (the "Insureds").
NOW, THEREFORE, PETRO, TRUSTEE OF TRUST TWO and TRUSTEE OF TRUST THREE
mutually agree as follows:
1. LIFE INSURANCE POLICIES.
-----------------------
a. PETRO and TRUSTEE OF TRUST TWO hereby amend the original Split
Dollar Life Insurance Agreement (the "Original Agreement"), dated May 7, 1993,
by and between PETRO PSC, L.P. and TRUSTEE OF TRUST TWO on behalf of TRUST
NUMBER TWO, as follows:
(1) One of the purposes of this Agreement is to memorialize the
rollout of policy number 66662402, issued by John Hancock Mutual Life
Insurance Company and insuring the
<PAGE>
life of EMPLOYEE from this split dollar arrangement (the "John Hancock
Policy"). PETRO acknowledges that, by agreement of even date, it has been
fully compensated for its interest in the John Hancock Policy and
specifically consents to the proposed transfer of this policy to TRUSTEE OF
TRUST THREE. However, the parties also acknowledge that this policy will
continue to remain collaterally assigned in favor of PETRO. The purposes
of the Collateral Assignment shall be (i) to maintain adequate security for
the continuing obligation of TRUSTEE OF TRUST TWO under this Agreement, as
amended, to PETRO as is contemplated by the other provisions of this
Agreement and (ii) to secure the obligations of TRUSTEE OF TRUST THREE to
pay those sums evidenced by the Note of May 1, 1995, payable to the order
of PETRO in the original principal sum of One Hundred Eighty-Nine Thousand
Nine Hundred and Seven Dollars ($189,907). Reference is here made to the
Note for a more complete description of its payment terms. Accordingly, as
is more particularly set out in Paragraph 3(c) of this Agreement, TRUSTEE
OF TRUST THREE acknowledges certain obligations to provide TRUST TWO with
sufficient liquidity to perform its obligations hereunder in certain
events. From and after the execution of this Agreement, PETRO shall have
no continuing obligation to pay future premiums on the John Hancock Policy.
(2) Similarly, by agreement of even date, the parties have reached an
accord and satisfaction as to the interests of all parties in policy number
3830841-7, issued by Manufacturer's Life Insurance Company (the
"Manufacturer's Policy"), which insured the joint lives of the Insureds.
Accordingly, the Manufacturer's Policy will no longer be the subject of
this split dollar life insurance agreement and PETRO shall have no
continuing obligation with respect to the maintenance of that policy.
(3) Policy numbers A10104422L and A10109424L, issued by American
General Insurance Company (the "American General Policies") and insuring
the joint lives of the Insureds, are to be retained by TRUSTEE OF TRUST TWO
and shall continue to be subject to this Agreement.
(4) Policy number 5407866, issued by Confederation Life Insurance
Company (the "Confederation Life Policy") and insuring the joint lives of
the Insureds, will continue to be owned jointly by TRUSTEE OF TRUST TWO and
PETRO and shall be subject to this Agreement. The Confederation Life
Policy was the subject of the Original Agreement between TRUSTEE OF TRUST
TWO and PETRO PSC, L.P. However, the premiums on the Confederation Life
Policy have not been paid by PETRO PSC, L.P. for some time, as
Confederation Life Insurance Company is currently in receivership. To
avoid a lapse of the Confederation Life Policy, the premiums on the
Confederation
<PAGE>
Life Policy have been paid by TRUSTEE OF TRUST TWO through loans from the
cash value of that policy. The premiums on the Confederation Life Policy
will continue to be paid by TRUSTEE OF TRUST TWO and PETRO jointly in this
manner for the foreseeable future. In the event that Confederation Life
Insurance Company emerges from receivership in a sufficiently stable
financial position, as determined by TRUSTEE OF TRUST TWO, PETRO will make
reasonable and appropriate arrangements to repay TRUSTEE OF TRUST TWO for
the premiums paid by it so that TRUSTEE OF TRUST TWO may repay the policy
loan thus accrued, in accordance with the spirit of the agreement between
the parties. If Confederation Life Insurance Company does not emerge from
receivership or fails to emerge in a sufficiently stable financial
position, as determined by TRUSTEE OF TRUST TWO and PETRO jointly, then:
(i) PETRO will be under no obligation to repay TRUSTEE OF TRUST TWO for any
premium amounts paid by the reduction in the cash value of the
Confederation Life Policy; (ii) premiums will either continue to be paid by
TRUSTEE OF TRUST TWO through loans from the cash value of that policy or
the policy will be disposed of by TRUSTEE OF TRUST TWO; and (iii) TRUSTEE
OF TRUST TWO shall remain liable for the repayment of sums owed to PETRO
PSC, L.P. and PETRO for premium payments made by either entity on the
Confederation Life Policy.
b. A complete list of policies owned by TRUST NUMBER TWO and subject
to this Agreement (the "Policies") is contained in Exhibit "A" attached hereto
and incorporated herein.
2. OWNERSHIP RIGHTS AND DUTIES UNDER THE POLICIES.
----------------------------------------------
a. TRUSTEE OF TRUST TWO shall be the sole and exclusive owner of the
Policies, and shall retain and exercise any and all incidents and rights of
ownership with respect to the Policies, to the exclusion of PETRO or any other
person or entity whomsoever. The parties intend this Agreement and the
arrangement contemplated hereby to constitute a split dollar arrangement as
described and approved in Rev. Rul. 64-328, 1964-2 C.B. 11.
b. PETRO shall not have any right to borrow against the cash
surrender values of the Policies to any extent. PETRO shall not possess any
"incidents of ownership" in the Policies as that term is defined by Section 2042
of the Internal Revenue Code of 1986 (the "Code") and the regulations
thereunder, as amended.
c. TRUSTEE OF TRUST TWO shall be responsible for safeguarding the
Policies.
d. The parties to this Agreement shall execute and forward promptly
and without unreasonable delay all information concerning changes in beneficiary
designations as well as any other forms, documents and information required by
any insurers to
<PAGE>
facilitate the exercise of any rights of the parties hereto. The parties shall
not be required to execute any documents or take any action that would impair
their respective interests under the Policies.
e. Neither PETRO nor TRUSTEE OF TRUST TWO shall have any right to
take any action that would cause the Policies to lapse or terminate.
f. It is the intention of the parties that TRUSTEE OF TRUST TWO
shall have any and all of the rights that the Policies grant to the owner
thereof. PETRO shall only have the right to receive reimbursement for any
amounts it expends in premium payments, as specifically set out herein. All
provisions of this Agreement shall be construed so as to carry out this
intention.
3. ASSIGNMENT OF INTEREST; COLLATERAL ASSIGNMENT. Concurrently with the
---------------------------------------------
execution of this Agreement, the following shall occur:
a. TRUSTEE OF TRUST TWO shall execute its Collateral Assignment of
the American General Policies in favor of PETRO, in form and substance identical
to that document attached hereto, denoted as Exhibit "B" and incorporated
herein. This Collateral Assignment will serve as security for the repayment of
any indebtedness of TRUSTEE OF TRUST TWO to PETRO incurred with respect to the
American General Policies under this Agreement. As long as the foregoing
Collateral Assignment is in force, neither party shall borrow against either of
the American General Policies without the consent of the other party.
Additionally, each party shall take whatever action is necessary or appropriate
to obtain the consent, or at a minimum, the acknowledgement of receipt of this
Collateral Assignment, on the part of American General Life Insurance Company.
b. The parties have heretofore executed an assignment in favor of
TRUSTEE OF TRUST TWO, as to the Confederation Life Policy, which assignment
reflects that such policy is jointly owned by PETRO PSC, L.P. and TRUSTEE OF
TRUST TWO. Neither party shall execute an assignment that is inconsistent with
the rights of the parties under that assignment or this Agreement.
c. The parties to this Agreement shall execute a First Amended
Limited Collateral Assignment of Split Dollared Policy, in form and substance
identical to that document attached hereto, denoted as Exhibit "C" and
incorporated herein. By executing this Agreement, TRUSTEE OF TRUST THREE agrees
that, if necessary, he will lend funds to TRUSTEE OF TRUST TWO to repay PETRO
for the sums owed to PETRO by TRUSTEE OF TRUST TWO and secured by the First
Amended Limited Collateral Assignment of Split Dollared Policy. Such loan shall
be made upon terms as may be negotiated between the borrower and lender at the
time that the loan is made, repayment
<PAGE>
shall include interest at the then-applicable federal rate and the loan shall be
secured by a pledge of adequate security by TRUSTEE OF TRUST TWO in favor of
TRUSTEE OF TRUST THREE. Notwithstanding anything to the contrary contained
herein, TRUSTEE OF TRUST THREE shall not be obligated to lend funds to TRUSTEE
OF TRUST TWO in excess of the settlement proceeds actually received by TRUSTEE
OF TRUST THREE from the John Hancock Policy.
d. By executing this Agreement, TRUSTEE OF TRUST TWO agrees that he
will repay TRUST NUMBER THREE for all sums advanced by TRUST NUMBER THREE to
PETRO pursuant to the preceding paragraph of this Agreement.
4. PAYMENT OF PREMIUMS.
-------------------
a. Payment of Premiums by PETRO. All premiums due on the Policies
----------------------------
shall be paid by PETRO promptly on or within ten (10) business days of the due
date thereof, as long as this Agreement shall continue in effect. TRUSTEE OF
TRUST TWO shall have the right to assume that the premium has been paid in a
timely manner unless PETRO advises him in writing of a different due date.
b. Timeliness of Payments. All premiums due on the Policies shall
----------------------
be paid on or before the due date of each policy premium, or within the grace
period provided therein, by PETRO, either by payment to TRUSTEE OF TRUST TWO for
remittance to the insurance company issuing that Policy (the "Insurer"), or
directly to the Insurer.
c. Tax Reporting Information. PETRO shall annually furnish EMPLOYEE
-------------------------
with a statement of the amount of income reportable by EMPLOYEE for federal
income tax purposes, if any, as a result of payment of such premiums by PETRO.
5. DISABILITY WAIVER OF PREMIUM. Notwithstanding any provision of this
----------------------------
Agreement to the contrary, if the Disability Waiver of Premium option is elected
on any Policies, and if either of the Insureds becomes disabled as defined by
the Insurer, this Agreement shall continue in full force and effect until it is
terminated in accordance with Paragraph 9 of this Agreement. The premiums paid
for such option as well as the premiums actually waived after either of the
Insureds becomes disabled shall be paid by PETRO.
6. USE OF DIVIDENDS. All dividends attributable to any Policy shall be
----------------
applied to reduce the payment by PETRO as defined in Paragraph 4 of this
Agreement.
7. PAYMENT OF PROCEEDS. Upon the death of the second insured to die,
-------------------
PETRO shall receive "Part One" of the Policies, and TRUSTEE OF TRUST TWO shall
be the beneficiary of "Part Two" of the Policies, as these terms are defined in
Paragraph 8 below.
<PAGE>
8. DEFINITIONS.
-----------
a. Part One is an amount payable to PETRO equal to the sum of the
total premiums (including premiums for any rider) paid by PETRO or Petro PSC
L.P. under the Policies whether paid prior or subsequent to the date hereof.
PETRO shall properly certify to TRUSTEE OF TRUST TWO the extent of sums owed it
in respect of a particular policy and payment of such amount shall release the
particular Insurer and TRUSTEE OF TRUST TWO from any liability to PETRO.
b. Part Two is an amount equal to the balance of the insurance
proceeds in excess of the amount receivable by PETRO as Part One above.
c. The parties agree that the beneficiary designation provisions of
the Policies shall conform to these provisions of this Agreement.
9. TERMINATION OF AGREEMENT. This Agreement shall terminate for any of
------------------------
the following reasons:
a. Performance of its terms, following the death of EMPLOYEE;
b. Termination of the employment of EMPLOYEE with PETRO for reasons
other than death or disability;
c. Total cessation of the business of PETRO;
d. Bankruptcy, receivership, or dissolution of PETRO;
e. Submission by either party to this Agreement of written notice of
such termination to the other party; or
f. Any action by one party that would defeat or impair the interest
of the other party other than death or termination of employment of EMPLOYEE.
Such action shall include, but is not limited to, failure to pay premiums or
cancellation of the Policies by any party hereto.
Termination of the Agreement because of the death of EMPLOYEE, termination
of employment of EMPLOYEE, or termination by written notice shall be effective
immediately. All other terminations shall be effective thirty (30) days from
any such action.
Upon termination of this Agreement, PETRO shall have no further obligation
or liability hereunder, including, but not limited to, any liability for payment
of premiums which may be due either before or after PETRO gives written notice
of termination. Notwithstanding anything to the contrary contained herein, any
and all sums owed to PETRO as a result of the termination of this
<PAGE>
Agreement shall be due and payable to PETRO no later than ninety (90) days
following the effective date of such termination.
10. REPAYMENT FOR REASONS OTHER THAN DEATH.
--------------------------------------
a. In all instances of termination other than by death, PETRO shall
certify to TRUSTEE OF TRUST TWO the extent of its advances in respect of any of
the Policies, and payment of such amount shall release TRUSTEE OF TRUST TWO from
any liability to PETRO.
b. Such repayment to PETRO of its interest in the Policies under
this Agreement shall be made in all events by TRUSTEE OF TRUST TWO, but to the
extent possible, shall first be made from the total cash values of the Policies.
The parties shall execute all documents necessary to facilitate such use of the
total cash values, regardless of any rights any party may have in such total
cash values, if any.
c. The right of PETRO to receive reimbursement of premiums paid and
the obligation of TRUSTEE OF TRUST TWO to repay such premiums, in the event of
termination for reasons other than death, shall be the amount designated in
Paragraph 8(a) of this Agreement.
11. DISPOSITION OF POLICIES UPON TERMINATION. Notwithstanding anything
----------------------------------------
to the contrary contained herein, upon termination hereof, PETRO shall be repaid
in accordance with the terms of this Agreement. The obligation of TRUSTEE OF
TRUST TWO to repay PETRO and the obligation of TRUSTEE OF TRUST THREE to lend
funds to TRUSTEE OF TRUST TWO pursuant to the provision of paragraph 3(c) hereof
shall survive the termination of this Agreement, regardless of the reason for
such termination. Following repayment to PETRO, TRUSTEE OF TRUST TWO may
dispose of the Policies upon termination of this Agreement by sale or otherwise,
upon such terms and conditions as may be determined by TRUSTEE OF TRUST TWO.
12. NAMED FIDUCIARY.
---------------
a. J.A. CARDWELL, Chief Executive Officer of PETRO, is hereby
designated as the NAMED FIDUCIARY of this Split Dollar Life Insurance Agreement,
in accordance with the Employee Retirement Income Security Act of 1974 and shall
serve in such capacity until resignation or removal by PETRO and appointment of
a successor by a duly adopted resolution by PETRO. The business address of the
NAMED FIDUCIARY is 6080 Surety Drive, El Paso, Texas 79905. The telephone
number of the NAMED FIDUCIARY is (915) 779-4711.
b. The NAMED FIDUCIARY shall have the authority to control and
manage the operation and administration of this Agreement. However, the NAMED
FIDUCIARY may delegate his
<PAGE>
responsibilities for the operation and administration of this Agreement,
including the designation of persons who are not Named Fiduciaries to carry out
fiduciary responsibilities. The NAMED FIDUCIARY shall effect such delegation of
his responsibilities by delivering to PETRO a written instrument signed by him
that specifies the nature and extent of the responsibilities delegated,
including, if appropriate, the persons, not Named Fiduciaries, who are
designated to carry out fiduciary responsibilities under this Agreement. The
NAMED FIDUCIARY of this Agreement shall be responsible for making timely
delivery of any required premiums to TRUSTEE OF TRUST TWO or directly to the
Insurer from PETRO. A copy of this Agreement and all other documents incident
hereto shall be retained by the NAMED FIDUCIARY and made available for
examination by the parties at the above indicated business address. Upon
written request, such documents and other information shall be provided to the
parties under this Agreement.
13. CLAIMS PROCEDURE.
----------------
a. Benefits shall be payable in accordance with the provisions of
this Agreement. Should TRUSTEE OF TRUST TWO or any beneficiary of the Policies
fail to receive benefits to which TRUSTEE OF TRUST TWO or such beneficiary
believes it is entitled, a claim may be filed. Any claim for a benefit
hereunder shall be filed by TRUSTEE OF TRUST TWO or beneficiary by written
communication which is reasonably calculated to bring the claim to the attention
of the NAMED FIDUCIARY.
b. If a claim for a benefit is wholly or partially denied, a written
notice of the decision shall be furnished to the claimant by the NAMED FIDUCIARY
or his designee within a reasonable period of time after receipt of the claim by
the NAMED FIDUCIARY, which notice shall include the following information:
(1) The specific reason or reasons for the denial;
(2) Specific reference to the pertinent provisions of this
Agreement upon which the denial is based;
(3) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(4) An explanation of the claim review procedures under this
Agreement.
c. In order that a claimant may appeal a denial of a claim, a
claimant or his duly authorized representative:
<PAGE>
(1) May request a review by written application submitted to the
NAMED FIDUCIARY or his designee not later than sixty (60) days after
receipt by the claimant of written notification of denial of a claim;
(2) May review pertinent documents; and
(3) May submit issues and comments in writing.
d. A decision on review of a denied claim shall be made not later
than sixty (60) days after the NAMED FIDUCIARY'S receipt of a request for
review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered within a reasonable
period of time, but not later than one hundred and twenty (120) days after
receipt of a request for review. The decision on review shall be in writing and
shall include the specific reason(s) for the decision and the specific
reference(s) to the pertinent provisions of this Agreement on which the decision
is based.
e. Notwithstanding anything contained in this Paragraph to the
contrary, any claim for a death benefit under an insurance policy subject to
this Agreement shall be filed with the Insurer by the claimant or his authorized
representative on the form or forms prescribed for such purpose by the Insurer.
The Insurer shall have sole authority for determining whether a death claim
shall or shall not be paid, either in whole or in part, in accordance with the
terms of such authority or insurance contract which may have been purchased on
the life of EMPLOYEE.
14. NOTICE. Any notice, consent or demand required or permitted to be
------
given under the provisions of this Agreement by one party to another shall be in
writing, shall be signed by the party giving or making the same, and may be
given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his, her or its last known address as shown on the records
of PETRO. The date of such mailing shall be deemed the date of such mailed
notice, consent or demand.
15. AMENDMENT OF AGREEMENT. This Agreement may be altered, amended or
----------------------
modified, including increasing the number or size of any insurance policies held
pursuant to this Agreement, only by a written agreement signed by PETRO and
TRUSTEE OF TRUST TWO, or their respective successors or assigns, and may not be
terminated except as provided in Paragraph 9 hereof.
16. INTERPRETATION OF AGREEMENT. Where appropriate in this Agreement,
---------------------------
words used in the singular shall include the plural and words used in the
masculine shall include the feminine and vice versa.
<PAGE>
17. LIABILITY OF INSURER. The Insurer is not a party to this Agreement.
--------------------
With respect to any policy of insurance issued pursuant to this Agreement, the
Insurer shall have no liability except as set forth in such policies. The
Insurer shall not be bound to inquire into or take notice of any of the
covenants herein contained as to policies of life insurance or as to the
application of the proceeds of such policies.
18. NO ASSIGNMENT. Neither party may assign all or any part of their
-------------
respective rights, duties or obligations under this Agreement without the prior
written consent of the other party being first obtained.
19. GOVERNING LAW. This Agreement, and the rights of the parties
-------------
hereunder, shall be governed by and construed in accordance with the laws of the
State of Texas.
20. BINDING AGREEMENT. This Agreement shall bind and inure to the benefit
-----------------
of all parties, their respective successors and assigns, and EMPLOYEE, any
Policy beneficiary and their respective successors, assigns and personal
representatives.
21. EFFECTIVE DATE. This Agreement continues to be effective for the
--------------
Policies subject to this Agreement as of the date hereof, and PETRO shall be
entitled to reimbursement for all premiums paid by either it or its predecessor
before or after April 30, 1992.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of May 1, 1995, regardless of the date actually signed.
PETRO STOPPING CENTERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: /s/ ULLRICH E. PORZIG
----------------------------
NAME: Ullrich E. Porzig
--------------------------
TITLE: Sr. Vice President and
Chief Financial Officer
------------------------
JAMES A. AND EVONNE CARDWELL
TRUST NUMBER TWO
/s/ JAMES A. CARDWELL, JR.
-------------------------------
JAMES A. CARDWELL, JR.,
TRUSTEE
<PAGE>
JAMES A. CARDWELL TRUST NO.
THREE
/s/ JAMES A. CARDWELL, JR.
-------------------------------
JAMES A. CARDWELL, JR.,
TRUSTEE
<PAGE>
EXHIBIT 10.29
================================================================================
OMNIBUS AGREEMENT
BY AND AMONG
JAMES A. CARDWELL, SR.
JAMES A. CARDWELL, JR.
JAJCO II, INC.
PETRO, INC.
MOBIL LONG HAUL INC.
PETRO HOLDINGS GP CORP.
PETRO HOLDINGS LP CORP.
PETRO STOPPING CENTERS, L.P.
DATED AS OF OCTOBER 18, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions............................................................ 3
2. Transactions........................................................... 3
2.1 General Partnership Interest Acquisition.......................... 4
2.2 Limited Partnership Interest Acquisitions......................... 4
2.3 Holdings LP Contribution.......................................... 4
2.4 Mobil Contribution................................................ 4
2.5 Cardwell Group Interests.......................................... 4
2.6 New Ownership Structure........................................... 4
2.7 Realco Contribution............................................... 5
2.8 Cash Contributions................................................ 5
2.9 Kirschner......................................................... 5
3. Deposits............................................................... 5
3.1 Mobil Deliveries.................................................. 5
3.1.1 Escrow Agreement.......................................... 6
3.1.2 Cash or Letter of Credit.................................. 6
3.2 Chartwell Deliveries.............................................. 6
4. Agreements to be Executed at the Closing............................... 6
4.1 Restated Partnership Agreement.................................... 6
4.2 Cardwell Group Documents.......................................... 6
4.2.3 Amended and Restated Indemnity and Hold
Harmless Agreements...................................... 7
4.3 Mobil Documents................................................... 7
4.3.1 Franchise Agreement....................................... 7
4.3.2 Marketing Services Agreement.............................. 7
4.3.3 Joint Project Memorandum of
Understanding............................................ 7
4.3.4 Personnel Services Agreement.............................. 8
4.3.5 Lubricant Supply Contracts................................ 8
4.4 Chartwell Documents............................................... 8
4.4.1 Financial Advisory Agreement.............................. 8
4.4.2 Management Consulting Agreement........................... 8
5. Closing Conditions Precedent........................................... 8
5.1 Interest Purchase Agreement Closing............................... 8
5.2 Operative Agreements.............................................. 8
5.3 New Partner Purchases............................................. 9
5.4 Financings........................................................ 9
5.4.1 Note Consent.............................................. 9
5.4.2 Petro Bank Credit Agreement............................... 9
5.5 Realco Transactions............................................... 9
5.6 Opinions.......................................................... 9
5.6.1 Akin, Gump................................................ 9
5.6.2 Kemp, Smith............................................... 10
5.6.3 Richards, Layton.......................................... 10
5.7 Representations and Warranties.................................... 10
5.8 Covenant Compliance............................................... 10
<PAGE>
Page
----
5.9 Consents.......................................................... 11
5.10 No Litigation..................................................... 11
5.10.1 No Injunctions............................................ 11
5.10.2 Government Action......................................... 12
5.10.3 No Orders................................................. 12
5.11 Conversion........................................................ 12
6. Conduct Pending Closing................................................ 12
6.1 Efforts to Satisfy................................................ 12
6.2 Deliveries........................................................ 13
6.3 Consents.......................................................... 13
6.4 Conversion........................................................ 13
7. Effectiveness and Termination.......................................... 13
7.1 Effectiveness..................................................... 13
7.2 Termination....................................................... 13
7.2.1 Terminating Party......................................... 13
7.2.2 Consent................................................... 14
7.2.3 Interest Purchase Agreement............................... 14
7.2.4 Default Grace Period...................................... 14
7.3 Effects of Termination............................................ 14
8. Representations and Warranties......................................... 15
8.1 Organization...................................................... 15
8.2 Power and Authority............................................... 16
8.3 No Violations..................................................... 16
8.4 No Conflict....................................................... 17
8.5 Consents.......................................................... 17
8.6 Litigation........................................................ 18
8.7 By the Cardwell Group............................................. 18
8.7.1 Ownership.................................................. 18
8.7.2 The Company................................................ 18
9. Indemnification........................................................ 19
9.1 General........................................................... 19
9.1.1 Standard................................................... 19
9.1.2 Actual Damages............................................. 19
9.1.3 Cardwell Cap............................................... 20
9.1.4 Chartwell Cap.............................................. 20
9.1.5 Mobil Cap.................................................. 20
9.1.6 Kirschner Cap.............................................. 20
9.1.7 Chartwell and Mobil........................................ 20
9.2 No Recourse....................................................... 21
9.3 Survival.......................................................... 21
10. Miscellaneous.......................................................... 21
10.1 Interpretation Not Affected by Headings........................... 21
10.2 Governing Law..................................................... 22
10.3 Severability...................................................... 22
10.4 Further Assurances................................................ 22
(ii)
<PAGE>
Page
----
10.5 Amendment; Waiver................................................ 22
10.5.1 Amendment................................................ 22
10.5.2 Restriction.............................................. 23
10.6 Assignment Restricted............................................ 23
10.7 Specific Performance............................................. 24
10.8 Notices.......................................................... 24
10.9 Counterparts..................................................... 26
10.10 No Third Party Beneficiaries..................................... 26
10.11 Entire Agreement................................................. 26
10.12 Expenses......................................................... 27
10.12.1 At Closing.............................................. 27
10.12.2 Failure to Close........................................ 27
10.12.3 The Company............................................. 27
EXHIBITS
--------
Exhibit A-1 - Fremont Partners and The Cardwell Group Ownership Interests
and Amounts
Exhibit A-2 - New Partners Ownership Interests and Amounts
Exhibit B - Restated Partnership Agreement
Exhibit C - Interest Purchase Agreement
Exhibit D - Escrow Agreement
Exhibit E - James A. Cardwell, Sr. Employment Agreement
Exhibit F - James A. Cardwell, Jr. Employment Agreement
Exhibit G - Mobil PMPA Distributor Motor Fuels Franchise Agreement
Exhibit H - Mobil Marketing Services Agreement
Exhibit I - Mobil Memorandum of Understanding Joint Project Development
Exhibit J - Mobil Secondment Agreement
Exhibit K - Mobil Master Supply Contract for Resale of Oils and Greases
Exhibit L - Chartwell Financial Advisory Agreement
Exhibit M - Chartwell Management Consulting Agreement
Exhibit N - Consent Solicitation
Exhibit O - First National Bank of Boston Amended and Restated Credit
Facility Commitment Letter and Term Sheet
Exhibit P-1 - Form of Opinion of Akin, Gump, Strauss,
Exhibit P-2 Hauer & Feld, L.L.P.
Exhibit Q - Form of Opinion of Kemp, Smith, Duncan & Hammond
Exhibit R - Form of Opinion of Richards, Layton & Finger
SCHEDULES
---------
Schedule 5.9 - Consents
Schedule 8.4 - Items of Conflict
Schedule 8.5 - Consents
Schedule 8.7.1 - Ownership Interests
(iii)
<PAGE>
OMNIBUS AGREEMENT
-----------------
THIS OMNIBUS AGREEMENT ("Omnibus Agreement"), is dated as of October 18,
-----------------
1996, by and among James A. Cardwell, Sr. ("Cardwell, Sr."), James A. Cardwell,
-------------
Jr. ("Cardwell, Jr."), JAJCO II, Inc., a Delaware corporation ("JAJCO"), Petro,
------------- -----
Inc., a Texas corporation ("Petro" and together with Cardwell, Sr., Cardwell,
-----
Jr., and JAJCO, collectively, the "Cardwell Group"), Mobil Long Haul, Inc., a
--------------
Delaware corporation ("Mobil"), Petro Holdings GP Corp., a Delaware corporation
-----
("Holdings GP"), Petro Holdings LP Corp., a Delaware corporation ("Holdings LP",
----------- -----------
and together with Holdings GP, "Chartwell") and Petro Stopping Centers, L.P., a
---------
Delaware limited partnership (the "Company").
-------
WITNESSETH:
----------
WHEREAS, the Company is currently owned by Sequoia Ventures, Inc., a
Delaware corporation ("SVI"), Roadside, Inc., a Delaware corporation
---
("Roadside", and together with SVI, collectively the "Fremont Partners") and the
-------- ----------------
Cardwell Group, in the respective ownership interests and amounts reflected on
Exhibit A-1 hereto; and
- -----------
WHEREAS, the parties hereto desire to take all actions necessary or
desirable to change the ownership structure of the Company so that, upon
completion of the transactions (the "Transactions") contemplated hereby and in
------------
the Operative Agreements (as defined below), the Company will be owned by
Chartwell, the Cardwell Group and Mobil (collectively, the "New Partners") in
------------
the respective ownership interests and amounts reflected on Exhibit A-2 hereto
-----------
and as more fully described in an amended and restated
<PAGE>
partnership agreement of the Company to be executed at the Closing (as hereafter
defined) by the New Partners, in the form attached hereto as Exhibit B (the
---------
"Restated Partnership Agreement"); and
- -------------------------------
WHEREAS, the Company, the Fremont Partners, Chartwell and Mobil have,
simultaneously with the execution of this Omnibus Agreement executed and
delivered an Interest Purchase Agreement (the "Interest Purchase Agreement"), a
---------------------------
copy of which is attached hereto as Exhibit C, pursuant to which Roadside and
---------
SVI have agreed to sell their interests in the Company at the Closing (as
defined therein) to Chartwell and Mobil, in exchange for approximately
$28,500,000 in cash, subject to adjustments pursuant to the terms of the
Interest Purchase Agreement, to be paid at the Closing (the "Purchase Price");
--------------
and
WHEREAS, Chartwell and Mobil desire to make capital contributions to the
Company and Realco (as defined below) at the Closing for the purpose of
acquiring additional partnership interests in the Company and interests in
Realco; and
WHEREAS, the New Partners wish to establish various contractual
arrangements and relationships among themselves and between each of them and the
Company relating to the Transactions and the operation of the Company after the
Closing;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
-2-
<PAGE>
1. Definitions. All capitalized terms used herein and not defined herein
-----------
shall have the meanings ascribed to them in the Restated Partnership
Agreement.
Term Defined in Section
---- ------------------
Affiliates 5.10.2
Cardwell Group Preamble
Cardwell, Jr. Preamble
Cardwell, Sr. Preamble
Chartwell Preamble
Closing 2
Company Preamble
Company Material Adverse Effect 5.7
Conversion 2.5
Escrow Agent 3.1.2
Escrow Agreement 3.1.1
Expenses 10.12.1
Financing Arrangements 5.4
Fremont Partners Recitals
General Partnership Interest 2.1
Holdings GP Preamble
Holdings LP Preamble
Indemnitees 9.1
Indemnitor 9.1
Interest Purchase Agreement Recitals
JAJCO Preamble
Letter of Credit 3.1.2
Liens 8.7.1
Limited Partnership Interest 2.2
Mobil Preamble
New Partner Material Adverse Effect 5.7
New Partners Recitals
Notes 5.4.1
Omnibus Agreement Preamble
Operative Agreements 5.2
Petro Preamble
Purchase Price Recitals
Realco 5.5
Restated Partnership Agreement Recitals
Roadside Recitals
SVI Recitals
Terminating Party 7.2.1
Transactions Recitals
2. Transactions. Upon the terms and subject to the conditions set forth
------------
in the Interest Purchase Agreement and the Restated Partnership Agreement, the
following transactions shall
-3-
<PAGE>
close simultaneously with the Closing under the Interest Purchase Agreement (the
"Closing"):
2.1 General Partnership Interest Acquisition. Holdings GP shall
----------------------------------------
purchase, acquire and accept from Roadside, the 1% Roadside General Partnership
Interest (as defined in the Interest Purchase Agreement).
2.2 Limited Partnership Interest Acquisitions. Holdings LP and Mobil
-----------------------------------------
shall purchase, acquire and accept from SVI the aggregate Limited Partnership
Interests owned by the Fremont Partners (as defined in the Interest Purchase
Agreement).
2.3 Holdings LP Contribution. In consideration of a capital
------------------------
contribution to the Company, Holdings LP shall purchase, acquire and accept from
the Company the balance of its Limited Partnership Interests.
2.4 Mobil Contribution. In consideration of a capital contribution
------------------
to the Company, Mobil shall purchase, acquire and accept from the Company the
balance of its Limited Partnership Interests.
2.5 Cardwell Group Interests. The Cardwell Group shall retain
------------------------
partnership interests in the Partnership, as set forth on Exhibit A-2 hereto,
-----------
which shall include the conversion prior to the Closing of all but 1.2139% of
Petro's General Partnership Interests in the Partnership into Limited
Partnership Interests (the "Conversion").
----------
2.6 New Ownership Structure. At the Closing, after completion of the
-----------------------
transactions contemplated herein and in the
-4-
<PAGE>
Interest Purchase Agreement, the ownership of the Company shall be as set forth
on Exhibit A-2 hereto.
-----------
2.7 Realco Contribution. At the Closing, the Chartwell Partners and
-------------------
Mobil shall contribute $2,620,733 and $379,267, respectively, to Realco, and
shall contribute $2,620,733 and $379,267 less, respectively, to the Company.
2.8 Cash Contributions. To accomplish the foregoing, the following
------------------
parties hereby agree to provide the following cash funds at the Closing to be
paid to the Fremont Partners, the Company or Realco (subject to adjustments in
the Purchase Price), as applicable:
Person Cash Commitment
----------- ---------------
Holdings GP $ 400,000
Holdings LP 20,330,000
Long Haul 15,000,000
2.9 Kirschner. The New Partners agree that Michael Kirschner shall
---------
have the opportunity to acquire on the terms hereof, for $1,000,000 in cash, the
limited partnership interests described on Exhibit A-2 hereto and in the
-----------
Restated Partnership Agreement. In order to exercise such opportunity,
Kirschner must execute and deliver to the parties hereto a copy of this
Agreement on or before November 1, 1996, wherein Kirschner shall become a "New
Partner" for purposes of this Agreement.
3. Deposits.
--------
3.1 Mobil Deliveries. Concurrently with the execution hereof and
----------------
of the Interest Purchase Agreement, Mobil shall:
-5-
<PAGE>
3.1.1 Escrow Agreement. Execute and deliver the escrow
----------------
agreement in substantially the form of Exhibit D hereto (the "Escrow
--------- ------
Agreement"); and
- ---------
3.1.2 Cash or Letter of Credit. Deliver to Fremont Partners a
------------------------
letter of credit in the amount of $500,000 naming the Escrow Agent (as defined
in the Escrow Agreement) as account beneficiary in substantially the form of
Exhibit A to the Escrow Agreement (the "Letter of Credit") or deposit with the
---------------- --
Escrow Agent the amount of $500,000 cash, which deposit shall be governed by the
terms of the Escrow Agreement; and
3.2 Chartwell Deliveries. Concurrently with the execution hereof
--------------------
and of the Interest Purchase Agreement, Chartwell shall:
3.2.1 Escrow Agreement. Execute and deliver the Escrow
----------------
Agreement; and
3.2.2 Cash Deposit. Deposit with the Escrow Agent the amount
------------
of $500,000 in cash, which deposit shall be governed by the terms of the Escrow
Agreement.
4. Agreements to be Executed at the Closing.
----------------------------------------
4.1 Restated Partnership Agreement. At the Closing, the New
------------------------------
Partners shall execute and deliver the Restated Partnership Agreement.
4.2 Cardwell Group Documents.
------------------------
4.2.1 Employment Agreements. At the Closing, the Company,
---------------------
Cardwell, Sr. and Cardwell, Jr., shall each execute and
-6-
<PAGE>
deliver the employment agreements, each in substantially the forms of Exhibits E
----------
and F hereto; and
-
4.2.2 Extensions. At the Closing, the Company, and the
----------
affiliates of the Cardwell Group who are parties thereto (the "Cardwell
Parties"), shall extend for five years and reflect the existence of the Restated
Partnership Agreement, in three of the Cardwell Parties agreements (C&R
Distributing Inc., El Paso Vending and Amusement Company and Motor Media Inc.).
4.2.3 Amended and Restated Indemnity and Hold Harmless
------------------------------------------------
Agreements. At the Closing, the Cardwell Group shall amend and restate, if
- ----------
necessary, the various Amended and Restated Indemnity and Hold Harmless
Agreements provided for the benefit of the Partnership in whatever manner
necessary to prevent, if possible, any of the Cardwell Group from incurring any
taxable gain upon closing of the various transactions described herein.
4.3 Mobil Documents. At the Closing, the Company and Mobil Oil
---------------
Corporation shall execute and deliver:
4.3.1 Franchise Agreement. A PMPA Distributor Motor Fuels
-------------------
Franchise Agreement in substantially the form of Exhibit H hereto;
---------
4.3.2 Marketing Services Agreement. A Management Marketing
----------------------------
Services Agreement in substantially the form of Exhibit I hereto;
---------
4.3.3 Joint Project Memorandum of Understanding. A Memorandum
-----------------------------------------
of Understanding Joint Project Development in substantially the form of Exhibit
-------
J hereto;
- -
-7-
<PAGE>
4.3.4 Personnel Services Agreement. A Secondment Agreement in
----------------------------
substantially the form of Exhibit K hereto; and
---------
4.3.5 Lubricant Supply Contracts. A Master Supply Contract
--------------------------
for Resale of Oils and Greases in substantially the form of Exhibit L hereto.
---------
4.4 Chartwell Documents. At the Closing, the Company and
-------------------
affiliates of Chartwell shall execute and deliver:
4.4.1 Financial Advisory Agreement. A Financial Advisory
----------------------------
Agreement in substantially the form of Exhibit M hereto; and
---------
4.4.2 Management Consulting Agreement. A Management
-------------------------------
Consulting Agreement in substantially the form of Exhibit N hereto.
---------
5. Closing Conditions Precedent. The obligations of each of the New
----------------------------
Partners to close the Transactions are subject to the satisfaction (unless such
condition is waived by each New Partner to the extent such New Partner is a
party thereto or would be materially adversely affected by the non-fulfillment
thereof) of the following conditions:
5.1 Interest Purchase Agreement Closing. The transactions
-----------------------------------
contemplated under the Interest Purchase Agreement shall have closed;
5.2 Operative Agreements. All other agreements required by Section
--------------------
4 (together with the Interest Purchase Agreement and the Escrow Agreement,
collectively, the "Operative
---------
-8-
<PAGE>
Agreements") shall have been duly executed and delivered by all necessary
- ----------
parties;
5.3 New Partner Purchases. All transactions required by Section 2
---------------------
hereof have been completed;
5.4 Financings. The following financing arrangements (the
----------
"Financing Arrangements") shall have closed:
- -----------------------
5.4.1 Note Consent. The Consent Solicitation relating to the
------------
Company's 12.5% Notes (the "Notes") on substantially the terms attached hereto
-----
as Exhibit O;
---------
5.4.2 Petro Bank Credit Agreement. The debt financing
---------------------------
contemplated in the Commitment Letter and attached term sheet attached hereto as
Exhibit P hereto, shall be available to the Company substantially on the terms
- ---------
indicated therein; and
5.5 Realco Transactions. Prior to the Closing, a separate Delaware
-------------------
limited partnership or limited liability company ("Realco") shall have been
------
formed, to be owned immediately following the Closing proportionately by the New
Partners in the same proportion as their common ownership of the general
partnership interests and limited partnership interests of the Company; the
initial capitalization of which shall be $1,000.
5.6 Opinions. Favorable opinions of the following law firms,
--------
reasonably acceptable to the addressees thereof and their counsel, shall have
been delivered to the New Partners:
5.6.1 Akin, Gump. Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
----------
counsel to Chartwell and Mobil substantially in the form of Exhibit P-1 and P-2
-------------------
hereto;
-9-
<PAGE>
5.6.2 Kemp, Smith. Kemp, Smith, Duncan & Hammond, counsel to
-----------
the Cardwell Group substantially in the form of Exhibit Q hereto; and
---------
5.6.3 Richards, Layton. Richards, Layton & Finger,
----------------
substantially in the form of Exhibit R hereto.
---------
5.7 Representations and Warranties. All of the representations and
------------------------------
warranties contained in this Omnibus Agreement shall be true and correct in all
respects (without reference to any materiality qualifications contained therein)
as of the date made and as of the Closing Date as if made on and as of the
Closing Date (except to the extent that any representation or warranty is made
expressly as of a specific date, in which case such representation or warranty
shall be true and correct as of such specified date), unless the failure of such
representations of warranties to be true and correct as of any of such dates
would not, in the aggregate, reasonably be expected to have a Company Material
Adverse Effect (as defined in the Interest Purchase Agreement) or a or a
material adverse effect on the ability of any party hereto to consummate the
transactions contemplated hereby or, following the Closing, on the business,
results of operations or financial condition of such party (a "New Partner
-----------
Material Adverse Effect").
- -----------------------
5.8 Covenant Compliance. Each party shall have performed and
-------------------
complied with, in all respects (without reference to any materiality
qualifications contained therein), all of the covenants, conditions and
agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing,
-10-
<PAGE>
unless the failure so to perform or comply would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or a New
Partner Material Adverse Effect; and the parties shall have received at the time
of the Closing certificates from each of the other parties reasonably
satisfactory in form certifying as to the satisfaction by each party of all of
the conditions set forth in Section 5.7 and this Section 5.8.
5.9 Consents. All material consents, permits, approvals and
--------
requirements of Governmental Authorities (as defined in the Interest Purchase
Agreement) and third parties (including any appraisals or fairness opinions
which may be required under the Indenture relating to the Notes) necessary for
consummation of the transactions contemplated in this Agreement, all of which
are listed on Schedule 5.9 hereto, shall have been obtained.
------------
5.10 No Litigation.
-------------
5.10.1 No Injunctions. No action, suit, claim or
--------------
administrative proceeding shall be pending seeking to restrain, enjoin or
prohibit or declare illegal, or seeking damages in connection with, any part of
the Omnibus Agreement or the transactions contemplated hereby, which would
reasonably be expected to result in a preliminary or permanent injunction
against consummating the transactions contemplated hereby or, if the
transactions contemplated hereby were consummated, an order to nullify or render
ineffective this Agreement or such transactions, or the recovery against any
party hereto of substantial damages or
-11-
<PAGE>
otherwise have a Company Material Adverse Effect or a New Partner Material
Adverse Effect.
5.10.2 Government Action. None of the parties to this
-----------------
Agreement or their Affiliates (as defined in the Restated Partnership Agreement)
shall have received written notice from any Governmental Authority (as defined
in the Interest Purchase Agreement) of: (A) its intention to institute any
action or proceeding to restrain or enjoin or nullify or render ineffective this
Agreement or the transactions contemplated hereby if consummated, or commence
any investigation into the consummation of this Agreement and the transactions
contemplated hereby; or (B) the actual commencement of such an investigation,
which in the case of either clause (A) or clause (B) would reasonably be
expected to have a Company Material Adverse Effect or a New Partner Material
Adverse Effect.
5.10.3 No Orders. No order, decree or judgment of any
---------
Governmental Authority shall be subsisting against any of the parties which
would render it unlawful or materially restrain or limit the ability of such
party as of the Closing Date, to effect the transactions contemplated hereunder
in accordance with the terms hereof.
5.11 Conversion. The Conversion shall have been completed.
----------
6. Conduct Pending Closing.
-----------------------
6.1 Efforts to Satisfy. Each party hereto shall use all
------------------
commercially reasonable efforts to satisfy the conditions to
-12-
<PAGE>
Closing set forth in this Omnibus Agreement and otherwise to consummate the
Transactions.
6.2 Deliveries. Consistent with the terms and conditions hereof,
----------
each party hereto shall execute and deliver such instruments, certificates and
other documents, and take such other action as each other party may reasonably
require in order to carry out this Omnibus Agreement and the Transactions,
including but not limited to authorizing the Company at the Closing to execute,
deliver and perform its Obligations under the Operative Agreements.
6.3 Consents. Each of the New Partners shall cause the Company
--------
effective at the Closing, to obtain all necessary approvals, and to take all
other actions necessary to authorize the execution and performance of the
Operative Agreements.
6.4 Conversion. Prior to the Closing, Petro shall convert all but
----------
1.2139% of its General Partnership Interest to a Limited Partnership Interest,
and the Company shall consent thereto.
7. Effectiveness and Termination.
-----------------------------
7.1 Effectiveness. This Omnibus Agreement shall become effective
-------------
as of the date hereof.
7.2 Termination. The Omnibus Agreement shall terminate:
-----------
7.2.1 Terminating Party. By any party hereto (the
-----------------
"Terminating Party") if (x) any other party is in material breach of this
- ------------------
Omnibus Agreement which would give rise to a claim
-13-
<PAGE>
for damages under Section 7.3 hereof and (y) such Terminating Party is not then
in material breach of this Omnibus Agreement;
7.2.2 Consent. By mutual written consent of all parties
-------
hereto including the Company; or
7.2.3 Interest Purchase Agreement. Automatically upon
---------------------------
termination of the Interest Purchase Agreement in accordance with its terms.
7.2.4 Default Grace Period. Notwithstanding any other
--------------------
provision of this Agreement, if a default by any party hereto can be cured or a
condition satisfied within fifteen (15) business days after the time initially
fixed for Closing as set forth herein, then the Closing Date shall be extended
for the period (not to exceed fifteen (15) business days and in no event beyond
February 1, 1997) required for such party to make such cure or satisfaction;
provided that such extension of time does not, and would not reasonably be
- --------
expected to, have a New Partner Material Adverse Effect (on any party desiring
to terminate the Agreement) on the New Partners or a Company Material Adverse
Effect. If such cure or satisfaction cannot be, or is not, completed within
fifteen (15) business days after such initial time, then the rights of the
parties shall be governed by the applicable provisions of this Agreement.
7.3 Effects of Termination. If this Omnibus Agreement is
----------------------
terminated and the Transactions contemplated hereby are not consummated, this
Omnibus Agreement shall become null and void and of no further force and effect,
except for any liability incurred
-14-
<PAGE>
by a party hereto as a result of any breach of a representation, warranty,
covenant or agreement contained in this Omnibus Agreement causing or permitting
termination subject to the limitations set forth in Section 9 hereof; provided,
--------
however, that no party shall have any liability for any such breach unless such
- -------
breach, together with all other breaches of such party shall, in the aggregate,
constitute a Company Material Adverse Effect or a New Partner Material Adverse
Effect; provided, further, that for purposes of determining whether or not such
-------- -------
breach or breaches, in the aggregate, constitute a Company Material Adverse
Effect or a New Partner Material Adverse Effect, any materiality qualification
of any individual representation, warranty, covenant or agreement contained in
this Agreement shall be disregarded.
8. Representations and Warranties. In order to induce the parties to
------------------------------
enter into this Omnibus Agreement and the Operative Agreements and to consummate
the transactions contemplated herein, each party hereto knowing that the other
parties are relying thereon, hereby represents and warrants as follows:
8.1 Organization. Such party: (i) if an entity, is a corporation
------------
duly organized, validly existing and in good standing under the laws of the
applicable jurisdiction of organization; (ii) has full power and authority to
carry on its business as now conducted and as proposed to be conducted under the
Operative Agreements and to own, use and lease its assets; and (iii) is duly
qualified to do business in each jurisdiction in which the nature
-15-
<PAGE>
of its business or the ownership, leasing or holding of its properties or assets
requires such qualification.
8.2 Power and Authority. Such party has full power and authority
-------------------
to enter into and to perform its obligations under this Omnibus Agreement and
the Operative Agreements to which it is a party in accordance with their
respective terms. Such party's execution, delivery and performance of this
Omnibus Agreement, the Operative Agreements and the transactions contemplated
thereby have been duly and wholly authorized by all requisite action, and have
been (or, to the extent to be executed in the future, will be) duly executed and
delivered by such party and constitute or will constitute valid and binding
obligations of such party, and enforceable against such party in accordance with
their terms except as such enforceability is limited by bankruptcy, insolvency,
moratorium or other similar laws of general application relating to or affecting
the enforcement of creditors' rights generally and the exercise of judicial
discretion in accordance with general equitable principles.
8.3 No Violations. There are no violations by such party of any
-------------
law, statutes, ordinances, rules, regulations, orders or requirements of any
governmental agency or body having jurisdiction over such party, the compliance
or non-compliance with which could reasonably be expected to have a material
adverse effect on the Company or on the ability of such party to consummate the
Transactions.
-16-
<PAGE>
8.4 No Conflict. Except as set forth on Schedule 8.4, the execution,
----------- ------------
delivery and performance of this Omnibus Agreement and the other documents to be
executed in connection herewith, the consummation of the transactions
contemplated hereby and thereby and the compliance with the provisions hereof
and thereof by any party hereto do not and will not, after the giving of notice,
or the lapse of time, or otherwise: (i) conflict with or violate any provisions
of the Articles of Incorporation or bylaws of such party; (ii) result in the
breach of any of the terms of, constitute a default under, conflict with, result
in, or constitute grounds for, the termination or alteration of, or result in
the acceleration of the performance required by the terms of, any agreement,
license, permit or other instrument to which any party hereto is a party or by
which such party or any of its property is bound or affected, or result in the
creation of any encumbrance upon any of their assets; (iii) violate, result in
the breach of, or conflict with, any laws, regulations, orders, writs,
ordinances, injunctions, decrees, rules, or judgments applicable to such party
or any of its assets.
8.5 Consents. Except as set forth on Schedule 8.5, no consent,
-------- ------------
waiver or approval of, or the filing of any notice or report with, any third
party or Governmental Authority is required in connection with the execution,
delivery and performance by such party of this Omnibus Agreement, the Operative
Agreements or any other document contemplated hereby, or the consummation of the
-17-
<PAGE>
transactions contemplated hereby (with or without the giving of notice or lapse
of time).
8.6 Litigation. As of the date hereof, there is no civil, criminal
----------
or administrative action, suit, demand, claim, litigation, action, proceeding or
investigation of any nature pending or, to the best of such party's knowledge,
threatened against or affecting such party that would adversely affect its
ability to consummate the transactions contemplated in this Omnibus Agreement or
the Operative Agreements.
8.7 By the Cardwell Group. Each party in the Cardwell Group hereby
---------------------
jointly and severally represents and warrants to the other New Partners that:
8.7.1 Ownership. Except as set forth in the Second Amended
---------
and Restated Partnership Agreement dated as of December 31, 1994 and, except as
disclosed on Schedule 8.7.1 hereto, the Cardwell Group owns beneficially and of
--------------
record the respective ownership interests and amounts reflected on Exhibit A-1
-----------
hereto, free and clear of all claims, charges, liens, security interests,
pledges, restrictions or other encumbrances of any nature whatsoever
(collectively, the "Liens"); and
-----
8.7.2 The Company. Subject to the authorization of the
-----------
Operative Agreements by the Company at the Closing, all representations and
warranties of the Company in Article III of the Interest Purchase Agreement are
true and correct as stated therein; provided that, for purposes of this Section
-------- ----
8.7.2, the phrases "the transactions contemplated hereby", "the transactions
provided for
-18-
<PAGE>
hereby" or "the obligations hereunder" contained in such Article III of the
Interest Purchase Agreement shall mean all transactions and obligations
contemplated in and under the Interest Purchase Agreement, this Omnibus
Agreement and the other Operative Agreements; and provided, further, that the
-------- -------
transfer of assets by the Company to Realco requires certain permits and
approvals of Governmental Authorities.
9. Indemnification.
---------------
9.1 General. Each party hereto and their respective successors and
-------
permitted assigns (an "Indemnitor"), shall indemnify, defend and hold each other
----------
party, its directors, officers, shareholders, partners, agents and employees,
and the Company (the "Indemnitees"), harmless from and against all suits,
-----------
claims, liabilities, damages, losses and costs (including but not limited to
Expenses) of every kind and character (including reasonable attorneys' fees and
accountants' fees and disbursements and costs of investigation) resulting from
or relating to or arising out of the inaccuracy, nonfulfillment, nonperformance,
or breach of any representation, warranty, covenant, or agreement made by such
Indemnitor herein; provided that:
-------- ----
9.1.1 Standard. For purposes of this Section 9, each
--------
Indemnitor hereto shall be liable only for actual damages caused, and shall not
be liable for any consequential damages or lost profits;
9.1.2 Actual Damages. No Indemnitor shall have any liability,
--------------
obligation or responsibility to any other party
-19-
<PAGE>
hereto or their respective affiliates under this Section 9 or otherwise in
connection with this Agreement or the Interest Purchase Agreement except for the
willful breach of this Agreement by any Indemnitor which prevents the occurrence
of the consummation of this Agreement;
9.1.3 Cardwell Cap. For purposes of this Section 9, each
------------
Indemnitor in the Cardwell Group shall be jointly and severally liable, and the
maximum total liability for all Indemnitors in the Cardwell Group under this
Section 9 to Mobil and Chartwell shall not exceed $1,000,000;
9.1.4 Chartwell Cap. For purposes of this Section 9, Holdings
-------------
GP and Holdings LP shall be jointly and severally liable, and the maximum total
liability for Chartwell under this Section 9 shall not exceed $500,000 (less any
amounts paid by such party to the Escrow Agent and not repaid to such party by
the Escrow Agent); and
9.1.5 Mobil Cap. The maximum total liability for Mobil under
---------
this Section 9 shall not exceed $500,000 (less any amounts paid by such party to
the Escrow Agent and not repaid to such party by the Escrow Agent).
9.1.6 Kirschner Cap. The maximum total liability of
-------------
Kirschner, if he elects to participate, under this Section 9 shall not exceed
$50,000.
9.1.7 Chartwell and Mobil. Chartwell and Mobil shall be
-------------------
jointly and severally liable to the Company for actual damages arising out of
any breach by either of them of any
-20-
<PAGE>
representations, warranties or covenants under this Agreement which results in
the transactions contemplated herein not Closing, and the Company shall have
recourse only to the Escrow Fund with respect thereto.
9.2 No Recourse. Notwithstanding Section 9.1, no employee,
-----------
officer, director, shareholder or partner of a party hereto or of any affiliate
thereof shall have any liability under this Omnibus Agreement or under any
Operative Agreement unless such employee, officer, director, shareholder or
partner is a party hereto or thereto.
9.3 Survival. The representations, warranties and covenants set
--------
forth in this Agreement shall survive the Closing (other than those in Section
8.7.2 which shall not survive the Closing).
10. Miscellaneous.
-------------
10.1 Interpretation Not Affected by Headings. The division of
---------------------------------------
this Omnibus Agreement into sections, articles, paragraphs and other portions
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Omnibus Agreement. The
terms "this Omnibus Agreement", "hereof", "herein", "hereunder" and similar
expressions refer to this Omnibus Agreement and not to any particular Section,
article, paragraph or other portion hereof and include any agreement or
instrument supplementary or ancillary hereto.
-21-
<PAGE>
10.2 Governing Law. This Omnibus Agreement shall be governed and
-------------
interpreted in accordance with the laws of the state of Delaware (regardless of
the laws that might be applicable under principles of conflicts of law) as to
all matters, including but not limited to matters of validity, construction,
effect and performance.
10.3 Severability. If any one or more of the provisions contained
------------
in this Omnibus Agreement or any document executed in connection herewith shall
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired. In the case of
any such invalidity, illegality or unenforceability, the parties hereto agree to
use their best efforts to achieve the purpose of such provision by a new legally
valid and enforceable stipulation.
10.4 Further Assurances. Each party hereto shall do all such acts
------------------
and execute and deliver all such documents or instruments as may reasonably be
requested by any other party hereto or their respective counsel as may be
necessary or desirable to complete the transactions contemplated by this Omnibus
Agreement and the Operative Agreements and to carry out the provisions hereof
and thereof,.
10.5 Amendment; Waiver.
-----------------
10.5.1 Amendment. This Omnibus Agreement may be amended,
---------
modified or superseded, and any of the terms, covenants or
-22-
<PAGE>
conditions hereof may be waived, at any time by a written instrument executed by
the parties hereto (other than the Company) or, in the case of a waiver, by the
party waiving compliance. The failure at any time of any party hereto to
require performance by another party of any responsibility or obligation
provided for in this Omnibus Agreement shall in no way affect the full right to
require such performance at any time thereafter, nor shall the waiver by any
party of a breach of any provision of this Omnibus Agreement by another party
constitute a waiver of the responsibility or obligation itself.
10.5.2 Restriction. Except with the prior written consent of
-----------
the Company, the parties hereto shall not amend, waive or otherwise modify this
Agreement in any manner that would be reasonably likely to have the effect of
(i) increasing any cost or liability on the part of the Fremont Partners in
connection with the consummation of the transactions provided for hereby or
thereby or (ii) decreasing the likelihood of the Closing occurring under this
Agreement or of the closing occurring under the Interest Purchase Agreement.
10.6 Assignment Restricted. This Omnibus Agreement shall be binding
---------------------
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No party hereto may assign this Omnibus Agreement, or its
rights or obligations hereunder, to any other person without the prior written
consent of each of the other parties hereto, other than to a wholly owned
-23-
<PAGE>
Affiliate and where the assignor continues to remain fully liable for all its
obligations hereunder.
10.7 Specific Performance. Each of the parties hereto agrees that
--------------------
the other parties hereto shall be entitled, in addition to any other remedies or
damages available to any of them in the event of any breach of this Omnibus
Agreement to specific performance of the obligations of the other parties under
this Omnibus Agreement.
10.8 Notices. Any and all notices or other communications required
-------
or permitted by this Omnibus Agreement or by law to be served on or given to any
party hereto by another party to this Omnibus Agreement shall be in writing and
shall be deemed duly served when personally delivered to the party to whom they
are directed, or in lieu of such personal service when deposited in the United
States mail, first-class postage prepaid, or by confirmed telecopy, or by
recognized overnight delivery service, addressed as follows:
If to any member of
the Cardwell Group: James A. Cardwell, Sr.
James A. Cardwell, Jr.
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Facsimile: (915) 774-7373
Telephone: (915) 774-7307;
With copy to: Kemp, Smith, Duncan & Hammond
2000 Norwest Plaza
20th Floor
El Paso, Texas 79901
Attention: Darrell R. Windham
Facsimile: (915) 546-5360
Telephone: (915) 533-4424
-24-
<PAGE>
If to the Company: Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attention: James A. Cardwell, Sr.
Facsimile: (915) 774-7307
Telephone: (915) 774-7307
With copies to: Skadden, Arps, Slate, Meagher
& Flom
Four Embarcadero Center
San Francisco, California 94111
Attention: Kenton J. King
Facsimile: (415) 984-2698
Telephone: (415) 984-6400
Kemp, Smith, Duncan & Hammond
2000 State National Bank Plaza
El Paso, Texas 79901
Attention: Darrell R. Windham
Facsimile: (915) 546-5360
Telephone: (915) 533-4424
If to Mobil: Mobil Long Haul Inc.
3225 Gallows Road
Fairfax, Virginia 22037
Attention: James H. Breed and
Mark A. Skolnik
Facsimile: (703) 846-4672
Telephone: (703) 846-5430
(703) 846-7025
With copy to: Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
1333 New Hampshire Ave., N.W.
Suite 400
Washington, D.C. 20036
Attention: Russell W. Parks, Jr., P.C.
Facsimile: (202) 887-4288
Telephone: (202) 887-4092
If to Holdings LP
or Holdings GP: c/o Chartwell Investments Inc.
717 Fifth Avenue
23rd Floor
New York, New York 10022
Attention: Todd R. Berman, President
Facsimile: (212) 521-5533
Telephone: (212) 521-5500
-25-
<PAGE>
With copy to: Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
1333 New Hampshire Ave., N.W.
Suite 400
Washington, D.C. 20036
Attention: Russell W. Parks, Jr., P.C.
Facsimile: (202) 887-4288
Telephone: (202) 887-4092
10.9 Counterparts. This Omnibus Agreement shall be executed in
------------
multiple counterparts, and may be executed in any number of additional
counterparts by any one or more of the parties bound hereby. A counterpart
shall be deemed to an original and such counterparts shall together constitute
the same agreement.
10.10 No Third Party Beneficiaries. Except as set forth in Section
----------------------------
10.12.3 hereto, none of the provisions of this Omnibus Agreement shall be for
the benefit of, or enforceable by, any person other than the parties hereto and
their permitted successors and assigns.
10.11 Entire Agreement. This Omnibus Agreement (including the
----------------
Exhibits and Schedules hereto, which are incorporated herein and made a part
hereof and the arrangements referred to in Section 10.12.2 below), together with
the Operative Agreements, sets forth the entire understanding and agreement
between the parties as to the matters covered herein and supersedes and replaces
any prior understanding, agreement or statement of intent, in each case, written
or oral, including without limitation the letters of intention and other
correspondence heretofore exchanged between the parties.
-26-
<PAGE>
10.12 Expenses.
--------
10.12.1 At Closing. The parties agree that at the Closing,
----------
all out-of-pocket costs and expenses of the New Partners and their affiliates
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement, the Operative Agreements, the Financing Arrangements and all
other documentation and transactions contemplated hereby and thereby, the due
diligence investigation, and the closing of the transactions contemplated hereby
and thereby (collectively, the "Expenses") shall, except as otherwise provided
--------
in the Interest Purchase Agreement, be borne and paid by the Company.
10.12.2 Failure to Close. In the event that the
----------------
transactions contemplated herein are not consummated, subject to separate
arrangements heretofore entered into between Chartwell and Mobil, and subject to
any party's right to indemnification pursuant to Section 9 hereof, each party
shall bear its own expenses.
10.12.3 The Company. The Company shall be a party to this
-----------
Agreement solely for purposes of Section 6.4, Section 7.2.2, Section 9 and
Section 10.5.2 hereof.
[THE NEXT PAGE IS A SIGNATURE PAGE]
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Omnibus
Agreement as of the date first above written.
/s/ James A. Cardwell
--------------------------------------------
James A. Cardwell, Sr.
/s/ James A. Cardwell, Jr.
--------------------------------------------
James A. Cardwell, Jr.
JAJCO II, INC.
By: /s/ J.A. Cardwell, Jr.
-----------------------------------------
Name: J.A. Cardwell, Jr.
---------------------------------------
Title: President
--------------------------------------
PETRO, INC.
By: /s/ J.A. Cardwell
-----------------------------------------
Name: J.A. Cardwell, Sr.
---------------------------------------
Title: President
--------------------------------------
MOBIL LONG HAUL INC.
By: /s/ Mark A. Skolnik
-----------------------------------------
Name: Mark A. Skolnik
---------------------------------------
Title: President
--------------------------------------
-28-
<PAGE>
PETRO HOLDINGS GP CORP.
By: /s/ Todd Berman
-----------------------------------------
Name: Todd Berman
---------------------------------------
Title: Vice President
--------------------------------------
PETRO HOLDINGS LP CORP.
By: /s/ Todd Berman
-----------------------------------------
Name: Todd Berman
---------------------------------------
Title: Vice President
--------------------------------------
PETRO STOPPING CENTERS, L.P.
By: /s/ J.A. Cardwell
-----------------------------------------
Name: J.A. Cardwell
---------------------------------------
Title: CEO
--------------------------------------
-29-
<PAGE>
The undersigned, Kirschner Investments, a Pennsylvania general partnership,
hereby agrees to the terms and conditions of, and agrees to be a party to, the
above Omnibus Agreement, dated as of October 18, 1996.
KIRSCHNER INVESTMENTS
By: /s/ Michael S. Kirschner
------------------------------------------
Michael S. Kirschner, a
general partner
By: /s/ Frederick M. Kirschner
------------------------------------------
Frederick M. Kirschner, a
general partner
-30-
<PAGE>
EXHIBIT 10.30
EXECUTION COPY
==========================================================================
AMENDMENT NO. 1
DATED AS OF JANUARY 30, 1997
TO
OMNIBUS AGREEMENT
BY AND AMONG
JAMES A. CARDWELL, SR.
JAMES A. CARDWELL, JR.
JAJCO II, INC.
PETRO, INC.
MOBIL LONG HAUL INC.
PETRO HOLDINGS GP CORP.
PETRO HOLDINGS LP CORP.
PETRO STOPPING CENTERS, L.P.
KIRSCHNER INVESTMENTS
DATED AS OF OCTOBER 18, 1996
==========================================================================
<PAGE>
AMENDMENT NO. 1
TO
OMNIBUS AGREEMENT
-----------------
THIS AMENDMENT is dated as of January 30, 1997, by and among James A.
Cardwell, Sr. ("Cardwell, Sr."), James A. Cardwell, Jr. ("Cardwell, Jr."),
------------- -------------
JAJCO II, Inc., a Delaware corporation ("JAJCO"), Petro, Inc., a Texas
-----
corporation ("Petro" and together with Cardwell, Sr., Cardwell, Jr., and
-----
JAJCO, collectively, the "Cardwell Group"), Mobil Long Haul, Inc., a Delaware
--------------
corporation ("Mobil"), Petro Holdings GP Corp., a Delaware corporation
-----
("Holdings GP"), Petro Holdings LP Corp., a Delaware corporation ("Holdings
----------- --------
LP", and together with Holdings GP, "Chartwell") and Petro Stopping Centers,
-- ---------
L.P., a Delaware limited partnership (the "Company"), and Kirschner
-------
Investments "Kirschner").
---------
WITNESSETH:
----------
WHEREAS, the parties hereto are parties to an Omnibus Agreement dated as
of October 18, 1996 (the "Omnibus Agreement"); and
-----------------
WHEREAS, the parties hereto desire to amend the Omnibus Agreement; and
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
A. Amendments. The Omnibus Agreement is hereby amended as follows:
----------
1. Realco. All references to Realco in the Agreement are hereby deleted
------
in their entirety.
<PAGE>
2. Realco Contribution. Section 2.7 is hereby deleted in its entirety.
-------------------
3. Kirschner Contribution. The November 1, 1996 date is hereby deleted
----------------------
and replaced with January 23, 1997. All references to Michael Kirschner in the
Omnibus Agreement shall for all purposes be changed to refer to Kirschner
Investments, a Pennsylvania general partnership.
4. Note Consent. Section 5.4.1 is hereby deleted in its entirety and
------------
replaced with the following:
"Section 5.4.1 Senior Notes. The Tender Offer/Consent Solicitation
------------
for the 12 1/2% Senior Notes due 2002, a copy of which documentation is
attached hereto as Exhibit 0-1, shall have closed in accordance with its
terms and the issuance by the Company of new Senior Notes due 2007,
substantially on the terms set forth in Exhibit 0-2 hereto, shall have been
consummated.
5. Petro Bank Credit Agreement. The Commitment Letter and attached term
---------------------------
sheet attached as Exhibit P is replaced with Exhibit P-1 attached hereto.
6. Realco Transactions. Section 5.5 is hereby deleted in its entirety.
-------------------
B. Reaffirmation.
-------------
Except as herein expressly provided, the Omnibus Agreement is in all
respects satisfied and confirmed and shall remain in full force and effect in
accordance with its terms.
C. Effectiveness.
-------------
This Amendment No. 1 shall become effective upon execution hereof by all the
listed signatories hereto.
-2-
<PAGE>
D. Counterparts. This Amendment No. 1 may be executed in any number of
------------
multiple counterparts. A counterpart shall be deemed to an original and such
counterparts shall together constitute the same agreement.
E. Governing Law. This Amendment No. 1 shall be governed and interpreted in
-------------
accordance with the laws of the state of Delaware (regardless of the laws that
might be applicable under principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect and
performance.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
No. 1 to the Omnibus Agreement as of the date first above written.
/s/ JAMES A. CARDWELL
-----------------------------------------
James A. Cardwell, Sr.
/s/ JAMES A. CARDWELL, JR.
-----------------------------------------
James A. Cardwell, Jr.
JAJCO II, INC.
By: /s/ JAMES A. CARDWELL, JR.
-----------------------------------------
Name: James A. Cardwell, Jr.
------------------------------------
Title: President
-----------------------------------
PETRO, INC.
By: /s/ JAMES A. CARDWELL
--------------------------------------
Name: James A. Cardwell, Sr.
------------------------------------
Title: President
-----------------------------------
MOBIL LONG HAUL INC.
By: /s/ MARK SKOLNIK
--------------------------------------
Name: Mark Skolnik
------------------------------------
Title: President
-----------------------------------
-4-
<PAGE>
PETRO HOLDINGS GP CORP.
By: /s/ MICHAEL A. SHEIN
---------------------------------------
Name: Michael A. Shein
-------------------------------------
Title: Vice President
------------------------------------
PETRO HOLDINGS LP CORP.
By: /s/ MICHAEL A. SHEIN
---------------------------------------
Name: Michael A. Shein
-------------------------------------
Title: Vice President
------------------------------------
PETRO STOPPING CENTERS, L.P.
By: /s/ JAMES A. CARDWELL
---------------------------------------
Name: James. A. Cardwell, Sr.
-------------------------------------
Title: President
------------------------------------
KIRSCHNER INVESTMENTS
By: /s/ MICHAEL S. KIRSCHNER
---------------------------------------
Michael S. Kirschner, a
general partner
By: /s/ FREDERICK M. KIRSCHNER
---------------------------------------
Frederick M. Kirschner, a
general partner
-5-
<PAGE>
EXHIBIT 10.32
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made this 30th day of January, 1997, by and between Petro
Stopping Centers, L.P., a Delaware limited partnership (the "Company"), and
JAMES A. CARDWELL ("Employee").
RECITALS:
--------
A. The Company is engaged in the business of owning, operating, and
franchising truck stops and related services.
B. The Company desires that Employee serve as Chairman, Chief Executive
Officer and President of the Company.
C. Employee has indicated his willingness to accept such employment
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the parties' mutual premises and
covenants as hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Employment. The Company hereby agrees to employ Employee and Employee
----------
hereby agrees to accept employment with the Company in accordance with the terms
and conditions set forth in this Agreement.
2. Term. Subject to the provisions for termination as hereinafter
----
provided, the term of this Agreement shall be effective as of the date hereof
(the "Effective Date") and shall continue through December 31, 1999 (the
"Employment Term"). If this Agreement is terminated pursuant to Section 9,
Employee shall only be entitled to receive those amounts expressly provided for
in Section 9 and no other. It is expressly understood and agreed that Employee
shall not be entitled to receive salary and benefits
<PAGE>
through the end of the term of this Agreement unless he is then an employee of
the Company or unless he is so entitled to the same pursuant to Section 9
hereof.
3. Compensation.
------------
(a) Salary. For all services rendered by Employee pursuant to this
------
Agreement, the Company shall pay to Employee an annual salary of $362,700 (the
"Base Salary"), payable in substantially equal installments in accordance with
the Company's customary practices, but in no event less often than twice monthly
(subject to all applicable withholdings, set offs, and taxes). The amount of
the Base Salary shall be reviewed by the Company's Board of Directors (the
"Board of Directors"), the Company's Compensation Committee or any equivalent
thereof (the "Compensation Committee"), and may be increased at the option of
the Board of Directors or the Compensation Committee.
(b) Bonus. In addition to the Base Salary, Employee shall be entitled
-----
to participate in or benefit from any bonus/incentive plan and policies of the
Company, to the extent determined by the Board of Directors, taking into account
Employee's Base Salary. Except as otherwise provided in this Agreement, if
during the Employment Term Employee dies or employment is terminated pursuant to
Section 9(a), Section 9(b), Section 9(c)(i) or 9(c)(iii) hereof, the amount of
the bonus for the fiscal year in which such event occurs shall be pro rated
based on the number of full months (out of twelve months) that Employee was
employed by the Company during such fiscal year (such prorated
-2-
<PAGE>
bonus shall be payable within 60 days after the end of such fiscal year). If
Employee's employment is terminated pursuant to Section 9(c)(ii) hereof,
Employee will not receive any portion of the bonus that he would have received
for such fiscal year had this Agreement not been so terminated.
(c) Other. In addition to any other compensation paid to Employee
-----
pursuant to the provisions of this Agreement, the Company may (but shall not be
obligated to) pay Employee additional compensation in an amount and manner and
at such time as is determined within the sole discretion of the Board of
Directors or the Compensation Committee. The Company shall pay Employee's
country club dues and provide him with the use of an appropriate automobile.
4. Duties. Employee agrees during his employment under this Agreement to
------
provide services on behalf of the Company as Chief Executive Officer and
President of the Company and to perform any other duties and assignments
relating to the business of the Company or its affiliates as may be assigned to
him by the Board of Directors of the Company having supervision over his
employment. Employee shall report directly to the Board of Directors. Employee
shall have the right to terminate and supervise all the Company's employees, and
shall have the authority over the day-to-day operations of the Company and such
other rights and responsibility as shall be consistent with his position.
Employee shall devote his full time, attention, energies and efforts to
performing his duties and promoting the Company's best interests on behalf of
the
-3-
<PAGE>
Company, and will not engage in any other outside employment (except personal
investment for his own account, and ownership and operation of entities engaged
in business with the Company, as approved by the Board of Directors), provided,
--------
however, that investments in competing businesses shall be limited to one
- -------
percent (1%) or less of the capital stock of public companies) without the prior
written approval of the Board of Directors. Nothing herein shall preclude
Employee from serving on boards of directors of other entities which do not
compete with the Company.
5. Working Facilities. The Company, at its own cost, shall furnish
------------------
Employee with office facilities, technical and secretarial personnel, supplies,
equipment and other facilities and services appropriate to his position and
adequate for the performance of his duties hereunder.
6. Expenses. In addition to the compensation provided for under Section
--------
3 hereof, the Company agrees to pay for (or to reimburse Employee for) all
reasonable business, travel and entertainment expenses incurred by Employee in
pursuance of his duties hereunder in accordance with established Company policy
from time to time in effect.
7. Vacation. At such reasonable time as the Company shall in its
--------
discretion permit, Employee shall be entitled without loss of pay to absent
himself voluntarily from the performance of his employment under this Agreement,
all such voluntary absences to count as vacation time; provided, that:
-------- ----
-4-
<PAGE>
(a) Such paid vacation shall consist of 20 working days per year.
Unused vacation days may be carried forward from one year to the next without
limitation to the extent permitted by the Company's then current policy.
(b) Upon the termination or nonrenewal of this Agreement, Employee
shall be entitled to receive compensation for all earned but unused vacation
days to the extent permitted by the Company's then current policy.
(c) In addition to the aforesaid paid vacations, Employee shall be
entitled (i) to all paid holidays and reasonable sick leave given by the Company
to its senior management and (ii) without loss of pay to absent himself
voluntarily from the performance of his employment with the Company for such
additional periods of time and for such valid and legitimate reasons as the
Board of Directors in its sole discretion may determine.
8. Other Benefits. During the Employment Term, Employee and his spouse
--------------
and dependents shall be entitled to participate in any and all group insurance,
medical benefit, disability insurance, pension, profit sharing or other employee
benefit plans, including but not limited to the Company's 401(k) plan, made
generally available to employees of the Company, and the various split dollar
insurance agreements in place as of October 18, 1996. Employee shall not
participate in the Company's Executive Equity Appreciation Plan.
-5-
<PAGE>
9. Termination. This Agreement may be terminated in the following
-----------
manner:
(a) This Agreement may be terminated upon sixty (60) days' prior
written notice given by Employee to the Company. This Agreement shall terminate
immediately upon the death of Employee. If this Agreement is terminated
pursuant to this Section 9(a), Employee or his heirs or assigns, as applicable,
shall only be entitled to receive any Base Salary accrued through such date of
termination and any bonus to which he is entitled pursuant to Section 3(b) of
this Agreement.
(b) This Agreement may be terminated upon thirty (30) days' prior
written notice delivered by Employee to the Company for "good reason." For
purposes hereof, "good reason" shall mean only a material reduction of the
Employee's authority, substantial change in work conditions, material decrease
of compensation or benefits, or relocation of his principal workplace to a place
over 50 miles from his initial principal workplace hereunder without Employee's
consent.
(c) This Agreement shall be terminable by the Company:
(i) at the Company's option upon thirty (30) days' prior
written notice if, because of injury, illness or other incapacity, whether
physical or mental, Employee becomes unable to perform all or substantially all
of his duties hereunder on a full-time basis for a period of four (4) full
months or more during any six (6) consecutive month period, in which event
Employee shall be entitled to receive Employee's compensation and benefits as
-6-
<PAGE>
shall have been earned or vested through the date of such determination of
disability and retain all then vested rights, privileges, and benefits;
(ii) at the Company's option upon written notice to Employee in
the event of: (A) willful failure by Employee to substantially and materially
perform his duties hereunder (other than any such failure resulting from
Employee's exercise of business judgment or incapacity due to physical or mental
illness), commission of a fraud on the Company, breach of fiduciary duty
involving material amount of personal gain, material breach of this Agreement,
or engagement of Employee in willful misconduct materially and demonstrably
injurious or detrimental to the Company or its affiliates, in each case which
continues and is not cured by Employee within thirty (30) days (the "Cure
Period") after a written notice and demand for material and substantial
performance is delivered to Employee by the Board of Directors which
specifically identifies the manner in which the Board of Directors believes that
Employee has committed breach, engaged in aforementioned misconduct or fraud, or
failed to substantially perform his material duties; provided, however,
-------- -------
notwithstanding any provisions to the contrary herein, such Cure Period shall be
extended for up to an additional thirty (30) day period in the event Employee
commences cure within the applicable Cure Period and continues to pursue
compliance with reasonable diligence thereafter; or (B) upon the conviction of
Employee of any criminal or fraudulent act (other than minor traffic or other
minor violations); or
-7-
<PAGE>
(iii) Otherwise at the Company's option upon thirty (30) days'
prior written notice except no notice shall be required in the event of a
Company termination pursuant to Section 6.5 of the Partnership Agreement (as
defined below).
Except as otherwise provided in the Partnership Agreement of the Company,
Employee agrees that upon any termination of this Agreement he shall resign from
all directorships, offices and other positions with the Company and its
subsidiaries and affiliates.
Notwithstanding any provisions to the contrary herein, in the event that
the Employee's employment under this Agreement is terminated pursuant to Section
9(b), 9(c)(i) or 9(c)(iii), the Company shall continue to pay Employee his then
current Base Salary and the health/insurance benefits to which he is entitled
pursuant to Section 8 of this Agreement for twelve months (the "Termination
Compensation Period") from the effective date of such termination. In addition
to the extent permitted by the Company's policies, Employee shall be entitled to
continue his and his family's participation in the Company's medical benefit
plan or plans but shall not be entitled to any other benefits, bonuses or
compensation unless otherwise specifically provided herein.
10. Non-Competition. During the employment of Employee with the Company
---------------
pursuant to this Agreement and during any time within a two-year period after
the date of his termination of employment in accordance with this Agreement,
Employee agrees that he shall
-8-
<PAGE>
comply with the terms and conditions of the Noncompetition Covenant as set forth
on Exhibit A hereto (the "Noncompetition Covenant") and the Nonsolicitation
---------
Covenant as set forth on Exhibit B hereto (the "Nonsolicitation Covenant").
---------
11. Confidentiality. Employee acknowledges that as a result of Employee's
---------------
employment with the Company, Employee will necessarily become informed of, and
have access to, certain valuable and confidential information of the Company,
including, without limitation, trade secrets, technical information, plans,
lists of customers, data, records, fee schedules, computer programs, manuals,
processes, methods, intangible rights, contracts, agreements, licenses, and
personnel information (collectively, the "Confidential Information"), and that
the Confidential Information, even though it may be contributed, developed, or
acquired in whole or in part by Employee, is the Company's exclusive property to
be held by Employee in trust and solely for the Company's benefit. Accordingly,
except as required by law, or for the performance of Employee's duties pursuant
to this Agreement, Employee shall not, at any time during the term of this
Agreement or thereafter, whether or not in the employ of the Company, its
affiliates or their successors, communicate, reveal, report, publish, copy,
divulge, use for the benefit of or otherwise disclose to any person, firm,
corporation or association, any of the Confidential Information of the Company,
its affiliates and/or any related corporation in its business and communicated
to or acquired by Employee while in the employment of the Company or its
-9-
<PAGE>
affiliates; provided that this Section shall not be violated by the
--------
communication or use by Employee of information which is or has become publicly
known without any breach by Employee of his obligations under this Section 11.
Employee agrees that any and all files, working papers, tapes, documents,
memoranda or other materials used or prepared by him in the course of his
employment shall be and remain the sole property of the Company. Upon
termination of employment, Employee shall not, without the written consent of
the Board of Directors of the Company, remove any originals or copies of any
files, working papers, tapes, documents, memoranda or other materials of the
Company or its affiliates, and shall turn over to the Company all such materials
and deliverable Confidential Information which are in his possession, custody or
control; provided, however, in the event Employee is alleged to have committed
-------- -------
any act or omission which would be grounds for the termination of this Agreement
pursuant to Section 9(c)(ii)(A) hereof, or Employee requires information
relating to personal financial or tax matters, Employee shall be given access,
during normal business hours at the office of the Company where the materials
that he desires to inspect are maintained, to any confidential information or
other materials which Employee reasonably believes are necessary therefor.
Employee shall be permitted, at his own expense, to make copies of any such
Confidential Information to the extent the same is necessary; provided, that
Employee shall not use such copies in a manner that violates this Section 11.
-10-
<PAGE>
12. Indemnification.
---------------
(a) The Company shall, to the extent provided in the Amended and
Restated Limited Partnership Agreement of the Company dated as of January 30,
1997 (the "Partnership Agreement"), indemnify and hold harmless Employee from
any and all losses, damages, claims or expenses that may be asserted against
Employee at any time in connection with his services for the Company, his
employment hereunder or that may otherwise derive from Employee's employment as
contemplated hereby.
(b) The Company may, but shall not be required to, maintain such
insurance for the protection of its officers and directors as is appropriate and
customary for entities engaged in the Company's business.
13. Notices. Any notice, request, demand or other communications required
-------
or permitted to be given under this Agreement shall be in writing and shall be
effective and deemed to have been duly given when delivered personally or on the
earlier to occur of (a) the date of delivery as shown by the return receipt; (b)
four (4) days after the mailing thereof by registered or certified mail, return
receipt requested, with first class postage prepaid; (c) confirmation of receipt
of telecopy; or (d) the day of delivery by a nationally recognized overnight
delivery service. All notices shall be addressed to the person at the addresses
set forth on the signature page hereto. Any party hereto may at any time and
from time to time change its address for purpose of receiving notices by giving
notice thereof to the other party as
-11-
<PAGE>
provided in this Section 13. Any notice which is required to be made within a
stated period of time shall be deemed timely if made before midnight of the last
day of such period.
14. Alteration or Amendment. No change or modification of this Agreement
-----------------------
shall be valid unless the same is in writing and signed by all the parties. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the person against whom it is sought to be enforced. The failure of
any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of the
same or any other condition, promise, agreement or understanding at a future
time.
15. Severability. If this Agreement or any portion thereof is, or the
------------
transactions contemplated hereby are, found to be inconsistent or contrary to
any valid applicable laws or official orders, rules and regulations, the
inconsistent or contrary provision of this Agreement shall be null and void and
such laws, orders, rules and regulations shall control and, as so modified, this
Agreement shall continue in full force and effect; provided, however, that
-------- -------
nothing herein contained shall be construed as a waiver of any right to question
or contest any such law, order, rule or regulation in any forum having
jurisdiction.
16. Governing Law. This Agreement shall be subject to and governed by the
-------------
laws of the State of Texas regardless of applicable conflict of laws rules or
principles or the fact that either or
-12-
<PAGE>
both of the parties now is or may become a resident of a different state or
country.
17. Benefit and Burden. This Agreement shall inure to the benefit of, and
------------------
shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and personal representatives. This Agreement shall not be
assignable by Employee, but may be assigned by the Company.
18. Authority. The person executing this Agreement on behalf of the
---------
Company hereby certifies that he or she has full power and authority to execute
and deliver this Agreement on behalf of the Company.
19. Entire Agreement. This document contains the entire agreement between
----------------
the parties. No statement, promises or inducements made by any party hereto, or
agent of either party hereto, which is not contained in this written contract,
shall be valid or binding; and this contract may not be enlarged, modified or
altered except in writing and signed by all the parties.
20. Additional Documents and Acts. In connection with this Agreement, as
-----------------------------
well as all transactions contemplated by this Agreement, each Party agrees to
execute and deliver such additional documents and instruments, provide all
information and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement and all such transactions. All approvals of a
Party hereto shall be in writing.
-13-
<PAGE>
21. Survival. The provisions of Sections 9 through 21 of this Agreement
--------
shall survive the termination of this Agreement without limitation except as
otherwise expressly stated therein.
-14-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Employee has executed this Agreement on the date
and year first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
-----------------------------------------
Name: Larry J. Zine
---------------------------------------
Title: Exec. Vice President
Address for Notice:
6080 Surety Dr.
--------------------------------------------
El Paso, TX 79905
--------------------------------------------
--------------------------------------------
EMPLOYEE
/s/ James A. Cardwell
--------------------------------------------
James A. Cardwell, Sr.
Address for Notice:
6080 Surety Dr.
--------------------------------------------
El Paso, TX 79905
--------------------------------------------
--------------------------------------------
-15-
<PAGE>
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
---------------------
THIS AGREEMENT is made this 30th day of January, 1997, by and between
Petro Stopping Centers, L.P., a Delaware limited partnership (the "Company"),
and JAMES A. CARDWELL, JR. ("Employee").
RECITALS:
--------
A. The Company is engaged in the business of owning, operating, and
franchising truck stops and related services.
B. The Company desires that Employee serve as Senior Vice President of
Marketing and Operations of the Company.
C. Employee has indicated his willingness to accept such employment
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the parties' mutual premises and
covenants as hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Employment. The Company hereby agrees to employ Employee and Employee
----------
hereby agrees to accept employment with the Company in accordance with the terms
and conditions set forth in this Agreement.
2. Term. Subject to the provisions for termination as hereinafter
----
provided, the term of this Agreement shall be effective as of the date hereof
(the "Effective Date") and shall continue through December 31, 1999 (the
"Employment Term"). If this Agreement is terminated pursuant to Section 9,
Employee shall only be entitled to receive those amounts expressly provided for
in Section 9 and no other. It is expressly understood and agreed that
<PAGE>
Employee shall not be entitled to receive salary and benefits through the end of
the term of this Agreement unless he is then an employee of the Company or
unless he is so entitled to the same pursuant to Section 9 hereof.
3. Compensation.
------------
(a) Salary. For all services rendered by Employee pursuant to this
------
Agreement, the Company shall pay to Employee an annual salary of $135,000 (the
"Base Salary"), payable in substantially equal installments in accordance with
the Company's customary practices, but in no event less often than twice monthly
(subject to all applicable withholdings, set offs, and taxes). The amount of
the Base Salary shall be reviewed by the Company's Board of Directors (the
"Board of Directors"), the Company's Compensation Committee or any equivalent
thereof (the "Compensation Committee"), and may be increased (but not decreased)
at least once each year to reflect that it is commensurate with the position,
the value of the services performed by Employee.
(b) Bonus. In addition to the Base Salary, Employee shall be entitled
-----
to participate in or benefit from any bonus/incentive plan and policies of the
Company, to the extent and in the same manner as other officers of the Company
similarly situated to Employee in their job responsibilities and title. Except
as otherwise provided in this Agreement, if during the Employment Term Employee
dies or employment is terminated pursuant to Section 9(a), Section 9(b), Section
9(c)(ii) or 9(c)(iii) hereof, the amount of the bonus for the fiscal year in
which such
-2-
<PAGE>
event occurs shall be pro rated based on the number of full months (out of
twelve months) that Employee was employed by the Company during such fiscal year
(such prorated bonus shall be payable within 60 days after the end of such
fiscal year). If Employee's employment is terminated pursuant to Section
9(c)(ii) hereof, Employee will not receive any portion of the bonus that he
would have received for such fiscal year had this Agreement not been so
terminated.
(c) Other. In addition to any other compensation paid to Employee
-----
pursuant to the provisions of this Agreement, the Company may (but shall not be
obligated to) pay Employee additional compensation in an amount and manner and
at such time as is determined within the sole discretion of the Board of
Directors or the Compensation Committee.
4. Duties. Employee agrees during his employment under this Agreement to
------
provide services on behalf of the Company as Senior Vice President of Marketing
and Operations and to perform any other duties and assignments relating to the
business of the Company or its affiliates as may be assigned to him by the Board
of Directors or by any officer of the Company having supervision over his
employment. Employee shall report directly to the President of the Company.
Employee shall devote his full time, attention, energies and efforts to
performing his duties and promoting the Company's best interests on behalf of
the Company, and will not engage in any other outside employment (except
personal investment for his own account, and ownership and operation of entities
engaged in
-3-
<PAGE>
business with the Company, as approved by the Board of Directors), provided,
--------
however, that investments in competing businesses shall be limited to one
- -------
percent (1%) or less of the capital stock of public companies) without the prior
written approval of the Board of Directors. Nothing herein shall preclude
Employee from serving on boards of directors of other entities which do not
compete with the Company.
5. Working Facilities. The Company, at its own cost, shall furnish
------------------
Employee with office facilities, technical and secretarial personnel, supplies,
equipment and other facilities and services appropriate to his position and
adequate for the performance of his duties hereunder.
6. Expenses. In addition to the compensation provided for under Section
--------
3 hereof, the Company agrees to pay for (or to reimburse Employee for) all
reasonable business, travel and entertainment expenses incurred by Employee in
pursuance of his duties hereunder in accordance with established Company policy
from time to time in effect. Employee shall furnish the Company with a monthly
statement and a description of the nature of the business purpose of each
expense for which he seeks reimbursement.
7. Vacation. At such reasonable time as the Company shall in its
--------
discretion permit, Employee shall be entitled without loss of pay to absent
himself voluntarily from the performance of his employment under this Agreement,
all such voluntary absences to count as vacation time; provided, that:
-------- ----
-4-
<PAGE>
(a) Such paid vacation shall consist of 15 working days per year.
Unused vacation days may be carried forward from one year to the next without
limitation to the extent permitted by the Company's then current policy.
(b) Upon the termination or nonrenewal of this Agreement, Employee
shall be entitled to receive compensation for all earned but unused vacation
days to the extent permitted by the Company's then current policy.
(c) In addition to the aforesaid paid vacations, Employee shall be
entitled (i) to all paid holidays and reasonable sick leave given by the Company
to its senior management and (ii) without loss of pay to absent himself
voluntarily from the performance of his employment with the Company for such
additional periods of time and for such valid and legitimate reasons as the
Board of Directors in its sole discretion may determine.
8. Other Benefits. During the Employment Term, Employee and his spouse
--------------
and dependents shall be entitled to participate in any and all group insurance,
medical benefit, disability insurance, pension, profit sharing or other employee
benefit plans, including but not limited to the Company's 401(k) plan, made
generally available to employees of the Company. Employee shall be entitled to
participate in the Company's Executive Equity Appreciation Plan in the same
manner as other executive officers of the Company participate.
-5-
<PAGE>
9. Termination. This Agreement may be terminated in the following
-----------
manner:
(a) This Agreement may be terminated upon sixty (60) days' prior
written notice given by Employee to the Company. This Agreement shall terminate
immediately upon the death of Employee. If this Agreement is terminated
pursuant to this Section 9(a), Employee or his heirs or assigns, as applicable,
shall only be entitled to receive any Base Salary accrued through such date of
termination and any bonus to which he is entitled pursuant to Section 3(b) of
this Agreement.
(b) This Agreement may be terminated upon thirty (30) days' prior
written notice delivered by Employee to the Company for "good reason." For
purposes hereof, "good reason" shall mean only a material reduction of the
Employee's authority, substantial change in work conditions, material decrease
of compensation or benefits, or relocation of his principal workplace to a place
over 50 miles from his initial principal workplace hereunder without Employee's
consent.
(c) This Agreement shall be terminable by the Company:
(i) at the Company's option upon thirty (30) days' prior written
notice if, because of injury, illness or other incapacity, whether physical or
mental, Employee becomes unable to perform all or substantially all of his
duties hereunder on a full-time basis for a period of four (4) full months or
more during any six (6) consecutive month period, in which event Employee shall
be entitled to receive Employee's compensation and benefits as shall
-6-
<PAGE>
have been earned or vested through the date of such determination of disability
and retain all then vested rights, privileges, and benefits;
(ii) at the Company's option upon written notice to Employee in
the event of: (A) willful failure by Employee to substantially and materially
perform his duties hereunder (other than any such failure resulting from
Employee's exercise of business judgment or incapacity due to physical or mental
illness), commission of a fraud on the Company, breach of fiduciary duty
involving material amount of personal gain, material breach of this Agreement,
or engagement of Employee in willful misconduct materially and demonstrably
injurious or detrimental to the Company or its affiliates, in each case which
continues and is not cured by Employee within thirty (30) days (the "Cure
Period") after a written notice and demand for material and substantial
performance is delivered to Employee by the Board of Directors which
specifically identifies the manner in which the Board of Directors believes that
Employee has committed breach, engaged in aforementioned misconduct or fraud, or
failed to substantially perform his material duties; provided, however,
-------- -------
notwithstanding any provisions to the contrary herein, such Cure Period shall be
extended for up to an additional thirty (30) day period in the event Employee
commences cure within the applicable Cure Period and continues to pursue
compliance with reasonable diligence thereafter; or (B) upon the conviction of
Employee of any criminal
-7-
<PAGE>
or fraudulent act (other than minor traffic violations or other minor
violations); or
(iii) Otherwise at the Company's option upon thirty (30) days'
prior written notice except no notice shall be required in the event of a
Company termination pursuant to Section 6.5 of the Partnership Agreement (as
defined below).
Except as otherwise provided in the Partnership Agreement of the Company,
Employee agrees that upon any termination of this Agreement he shall resign from
all directorships, offices and other positions with the Company and its
subsidiaries and affiliates.
Notwithstanding any provisions to the contrary herein, in the event that
the Employee's employment under this Agreement is terminated pursuant to Section
9(b), 9(c)(i) or 9(c)(iii), the Company shall continue to pay Employee his then
current Base Salary and the health/insurance benefits to which he is entitled
pursuant to Section 8 of this Agreement for twelve months (the "Termination
Compensation Period") from the effective date of such termination. In addition,
to the extent permitted by the Company's policies, Employee shall be entitled to
continue his and his family's participation in the Company's medical benefit
plan or plans but shall not be entitled to any other benefits, bonuses or
compensation unless otherwise specifically provided herein.
10. Non-Competition. During the employment of Employee with the Company
---------------
pursuant to this Agreement and during any time within a two-year period after
the date of his termination of employment in accordance with this Agreement,
Employee agrees that he shall
-8-
<PAGE>
comply with the terms and conditions of the Noncompetition Covenant as set forth
on Exhibit A hereto (the "Noncompetition Covenant") and the Nonsolicitation
---------
Covenant as set forth on Exhibit B hereto (the "Nonsolicitation Covenant").
---------
11. Confidentiality. Employee acknowledges that as a result of Employee's
---------------
employment with the Company, Employee will necessarily become informed of, and
have access to, certain valuable and confidential information of the Company,
including, without limitation, trade secrets, technical information, plans,
lists of customers, data, records, fee schedules, computer programs, manuals,
processes, methods, intangible rights, contracts, agreements, licenses, and
personnel information (collectively, the "Confidential Information"), and that
the Confidential Information, even though it may be contributed, developed, or
acquired in whole or in part by Employee, is the Company's exclusive property to
be held by Employee in trust and solely for the Company's benefit. Accordingly,
except as required by law, or for the performance of Employee's duties pursuant
to this Agreement, Employee shall not, at any time during the term of this
Agreement or thereafter, whether or not in the employ of the Company, its
affiliates or their successors, communicate, reveal, report, publish, copy,
divulge, use for the benefit of or otherwise disclose to any person, firm,
corporation or association, any of the Confidential Information of the Company,
its affiliates and/or any related corporation in its business and communicated
to or acquired by Employee while in the employment of the Company or its
-9-
<PAGE>
affiliates; provided that this Section shall not be violated by the
--------
communication or use by Employee of information which is or has become publicly
known without any breach by Employee of his obligations under this Section 11.
Employee agrees that any and all files, working papers, tapes, documents,
memoranda or other materials used or prepared by him in the course of his
employment shall be and remain the sole property of the Company. Upon
termination of employment, Employee shall not, without the written consent of
the Board of Directors of the Company, remove any originals or copies of any
files, working papers, tapes, documents, memoranda or other materials of the
Company or its affiliates, and shall turn over to the Company all such materials
and deliverable Confidential Information which are in his possession, custody or
control; provided, however, in the event Employee is alleged to have committed
-------- -------
any act or omission which would be grounds for the termination of this Agreement
pursuant to Section 9(c)(ii)(A) hereof, or Employee requires information
relating to personal financial or tax matters, Employee shall be given access,
during normal business hours at the office of the Company where the materials
that he desires to inspect are maintained, to any confidential information or
other materials which Employee reasonably believes are necessary therefor.
Employee shall be permitted, at his own expense, to make copies of any such
Confidential Information; provided, that Employee shall not use such copies in a
manner that violates this Section 11.
-10-
<PAGE>
12. Indemnification.
---------------
(a) The Company shall, to the extent provided in the Amended and
Restated Limited Partnership Agreement of the Company dated as of January 30,
1997 (the "Partnership Agreement"), indemnify and hold harmless Employee from
any and all losses, damages, claims or expenses that may be asserted against
Employee at any time in connection with his services for the Company, his
employment hereunder or that may otherwise derive from Employee's employment as
contemplated hereby.
(b) The Company may, but shall not be required to, maintain such
insurance for the protection of its officers and directors as is appropriate and
customary for entities engaged in the Company's business.
13. Notices. Any notice, request, demand or other communications required
-------
or permitted to be given under this Agreement shall be in writing and shall be
effective and deemed to have been duly given when delivered personally or on the
earlier to occurs of (a) the date of delivery as shown by the return receipt;
(b) four (4) days after the mailing thereof by registered or certified mail,
return receipt requested, with first class postage prepaid; (c) confirmation of
receipt of telecopy; or (d) the day of delivery by a nationally recognized
overnight delivery service. All notices shall be addressed to the person at the
addresses set forth on the signature page hereto. Any party hereto may at any
time and from time to time change its address for purpose of receiving notices
by giving notice thereof to the other party as
-11-
<PAGE>
provided in this Section 13. Any notice which is required to be made within a
stated period of time shall be deemed timely if made before midnight of the last
day of such period.
14. Alteration or Amendment. No change or modification of this Agreement
-----------------------
shall be valid unless the same is in writing and signed by all the parties. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the person against whom it is sought to be enforced. The failure of
any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of the
same or any other condition, promise, agreement or understanding at a future
time.
15. Severability. If this Agreement or any portion thereof is, or the
------------
transactions contemplated hereby are, found to be inconsistent or contrary to
any valid applicable laws or official orders, rules and regulations, the
inconsistent or contrary provision of this Agreement shall be null and void and
such laws, orders, rules and regulations shall control and, as so modified, this
Agreement shall continue in full force and effect; provided, however, that
-------- -------
nothing herein contained shall be construed as a waiver of any right to question
or contest any such law, order, rule or regulation in any forum having
jurisdiction.
16. Governing Law. This Agreement shall be subject to and governed by the
-------------
laws of the State of Texas regardless of applicable conflict of laws rules or
principles or the fact that either or
-12-
<PAGE>
both of the parties now is or may become a resident of a different state or
country.
17. Benefit and Burden. This Agreement shall inure to the benefit of, and
------------------
shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and personal representatives. This Agreement shall not be
assignable by Employee, but may be assigned by the Company.
18. Authority. The person executing this Agreement on behalf of the
---------
Company hereby certifies that he or she has full power and authority to execute
and deliver this Agreement on behalf of the Company.
19. Entire Agreement. This document contains the entire agreement between
----------------
the parties. No statement, promises or inducements made by any party hereto, or
agent of either party hereto, which is not contained in this written contract,
shall be valid or binding; and this contract may not be enlarged, modified or
altered except in writing and signed by all the parties.
20. Additional Documents and Acts. In connection with this Agreement, as
-----------------------------
well as all transactions contemplated by this Agreement, each Party agrees to
execute and deliver such additional documents and instruments, provide all
information and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement and all such transactions. All approvals of a
Party hereto shall be in writing.
-13-
<PAGE>
21. Survival. The provisions of Sections 9 through 21 of this Agreement
--------
shall survive the termination of this Agreement without limitation except as
otherwise expressly stated therein.
-14-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Employee has executed this Agreement on the date
and year first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ JAMES A. CARDWELL
----------------------------------
Name: James a. Cardwell Sr.
--------------------------------
Title: Pres.
-------------------------------
Address for Notice:
6080 Surety Dr.
-------------------------------------
El Paso, TX 79905
-------------------------------------
-------------------------------------
EMPLOYEE
/s/ JAMES A. CARDWELL, JR.
-------------------------------------
James A. Cardwell, Jr.
Address for Notice:
6080 Surety Dr.
-------------------------------------
El Paso, TX 79905
-------------------------------------
-------------------------------------
-15-
<PAGE>
EXHIBIT 10.34
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made this 31st day of December, 1996, by and between
Petro Stopping Centers, L.P., a Delaware limited partnership (the "Company"),
and LARRY ZINE ("Employee").
RECITALS:
--------
A. The Company is engaged in the business of owning, operating, and
franchising truck stops and related services.
B. The Company desires that Employee serve as Executive Vice President
and Chief Financial Officer of the Company.
C. Employee has indicated his willingness to accept such employment
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the parties' mutual premises and
covenants as hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Employment. The Company hereby agrees to employ Employee and Employee
----------
hereby agrees to accept employment with the Company in accordance with the terms
and conditions set forth in this Agreement.
2. Term. Subject to the provisions for termination as hereinafter
----
provided, the term of this Agreement shall be effective as of the date hereof
(the "Effective Date") and shall continue through December 31, 1999 (the
"Employment Term"). If the Employment Term is terminated pursuant to Section 9,
Employee shall
<PAGE>
only be entitled to receive those amounts expressly provided for in Section 9
and no other. It is expressly understood and agreed that Employee shall not be
entitled to receive salary and benefits through the end of the term of this
Agreement unless he is then an employee of the Company or unless he is so
entitled to the same pursuant to Section 9 hereof.
3. Compensation.
------------
(a) Salary. For all services rendered by Employee pursuant to this
------
Agreement, during the Employment Term, the Company shall pay to Employee an
annual salary of $290,000 (the "Base Salary"), payable in substantially equal
installments in accordance with the Company's customary practices, but in no
event less often than twice monthly (subject to all applicable withholdings, set
offs, and taxes). The amount of the Base Salary shall be subject to annual
review for possible increases by the Company's Board of Directors (the "Board of
Directors"), the Company's Compensation Committee or any equivalent thereof (the
"Compensation Committee"), and may be increased at the option of the Board of
Directors or the Compensation Committee.
(b) Bonus. In addition to the Base Salary, during the Employment
-----
Term, Employee shall be eligible to receive an annual cash bonus. For the year
ended December 31, 1997, Employee shall be eligible to receive up to 100% of his
Base Salary based on a methodology to be determined by the Employee and the
Chief Executive Officer of the Company and approved by the Board of Directors of
the Company; provided, however, that, Employee's cash
-------- ------- ----
-2-
<PAGE>
bonus during such period shall in no event be less than 40% of his Base Salary
for the period. During the years ended December 31, 1998 and 1999, Employee
shall be eligible to earn a cash bonus of up to 100% of his Base Salary based on
a formula to be agreed upon by the Employee and the Chief Executive Officer of
the Company and approved by the Board of Directors of the Company, which formula
shall be based on targets substantially similar to those applicable to the Chief
Executive Officer. If during the Employment Term Employee dies or employment is
terminated pursuant to Section 9(a), Section 9(b), Section 9(c)(i) or 9(c)(iii)
hereof, the amount of the bonus for the fiscal year in which such event occurs
shall be pro rated based on the number of full months (out of twelve months)
that Employee was employed by the Company during such fiscal year (such prorated
bonus shall be payable within 60 days after the end of such fiscal year). If
Employee's employment is terminated pursuant to Section 9(c)(ii) hereof,
Employee will not receive any portion of the bonus that he would have received
for such fiscal year had this Agreement not been so terminated.
(c) Equity. Concurrently with the closing (the "Closing") of the
------
transactions outlined in the Omnibus Agreement, dated as of October 18, 1996,
Employee shall receive options to purchase 2.75% of the common partnership
interests (or appreciation rights with respect thereto) of the Company (the
"Option"), fully diluted as of the date of the Closing, at a per 1% common
partnership interest exercise price equal to the per 1% common partnership price
to be paid by affiliates of Chartwell Investments
-3-
<PAGE>
Inc. at the Closing. The terms and conditions of the Option shall be set forth
in an Option/SAR Agreement to be mutually agreed upon prior to the Closing. The
Option/SAR Agreement shall provide, among other things that: (i) the Option
shall become exercisable with respect to 25% thereof on each of December 31,
1997, 1998, 1999 and 2000 unless there is a "change of control" of the Company,
in which case the Option shall immediately become exercisable with respect to
100% thereof; (ii) the Employee, upon termination pursuant to Section 9(a)(iii),
shall have the right to request the Company to acquire, and the Company shall,
if requested, purchase (if permitted under the Company's existing debt
instruments), the Option (and any partnership interests issued upon exercise of
the Option) at the fair market value of such securities. For purposes of this
Agreement: (x) a "Change of Control" means any person, other than the partners
at the Closing, acquiring more than 50% of the common partnership interests in
the Company, or Petro Holdings GP Corp. and Petro Holdings LP Corp. transferring
more than 50% of their equity interests in the Company held as of the Closing to
an unrelated third party, or the replacement of the Company's Chief Executive
Officer other than pursuant to Section 6.5 of the Third Amended and Restated
Limited Partnership Agreement of the Company; and (y) fair market value means
the value determined by a nationally recognized investment banker selected by
the Company (the "Company Appraiser") unless Employee disagrees with such
valuation, in which event the fair market value means the average
-4-
<PAGE>
of the values determined by the Company Appraiser and a nationally recognized
investment
banker selected by the Employee.
(d) Other. In addition to any other compensation paid to Employee
-----
pursuant to the provisions of this Agreement, the Company may (but shall not be
obligated to) pay Employee additional compensation in an amount and manner and
at such time as is determined within the sole discretion of the Board of
Directors or the Compensation Committee.
4. Duties. Employee agrees during his employment under this Agreement to
------
provide services on behalf of the Company as Executive Vice President and Chief
Financial Officer of the Company and to perform any other duties and assignments
relating to the business of the Company or its affiliates as may be assigned to
him by the Board of Directors of the Company or the Chief Executive Officer of
the Company consistent with his position as Executive Vice President and Chief
Financial Officer. Employee shall report directly to the Chief Executive
Officer. Employee shall have such rights and responsibilities as shall be
consistent with his position. Employee shall devote his full time, attention,
energies and efforts to performing his duties and promoting the Company's best
interests on behalf of the Company, and will not engage in any other outside
employment (except personal investment for his own account, provided, however,
-------- -------
that investments in competing businesses shall be limited to one percent (1%) or
less of the capital stock of public companies) without the prior written
approval of the Board of Directors. Nothing herein shall preclude
-5-
<PAGE>
Employee from serving on boards of directors of other entities which do not
compete with the Company.
5. Working Facilities. The Company, at its own cost, shall furnish
------------------
Employee with office facilities, technical and secretarial personnel, supplies,
equipment and other facilities and services appropriate to his position and
adequate for the performance of his duties hereunder.
6. Expenses. In addition to the compensation provided for under Section
--------
3 hereof, the Company agrees to pay for (or to reimburse Employee for): (a) all
reasonable business, travel and entertainment expenses incurred by Employee in
pursuance of his duties hereunder in accordance with established Company policy
from time to time in effect; and (b) all relocation expenses outlined on Exhibit
-------
A attached hereto.
- -
7. Vacation. At such reasonable time as the Company shall in its
--------
discretion permit, Employee shall be entitled without loss of pay to absent
himself voluntarily from the performance of his employment under this Agreement,
all such voluntary absences to count as vacation time; provided, that:
-------- ----
(a) Such paid vacation shall consist of 20 working days per year.
Unused vacation days may be carried forward from one year to the next up to four
weeks.
(b) Upon the termination of the Employment Term or nonrenewal of this
Agreement, Employee shall be entitled to receive compensation for all earned but
unused vacation days to the extent permitted by the Company's then current
policy.
-6-
<PAGE>
(c) In addition to the aforesaid paid vacations, Employee shall be
entitled (i) to all paid holidays and reasonable sick leave given by the Company
to its senior management and (ii) without loss of pay to absent himself
voluntarily from the performance of his employment with the Company for such
additional periods of time and for such valid and legitimate reasons as the
Board of Directors in its sole discretion may determine.
8. Other Benefits.
--------------
(a) During the Employment Term, Employee and his spouse and dependents
shall be entitled to participate in any and all group insurance, medical
benefit, disability insurance, pension, profit sharing or other employee benefit
plans, including but not limited to the Company's 401(k) plan, made generally
available to employees of the Company, and the Company shall pay his portable
life and disability insurance premiums, not to exceed $1,600 per annum.
Employee shall not participate in the Company's Executive Equity Appreciation
Plan other than as provided in Section 3(c) hereof.
(b) Employee shall also be responsible for formulating, and shall be
entitled to participate in, a Senior Employee Benefit Program, which plan shall
be subject to the approval of the Company's Board of Directors.
9. Termination. The Employment Term may be terminated in the following
-----------
manner:
(a) The Employment Term may be terminated upon sixty (60) days' prior
written notice given by Employee to the Company.
-7-
<PAGE>
This Agreement shall terminate immediately upon the death of Employee. If the
Employment Term is terminated pursuant to this Section 9(a), Employee or his
heirs or assigns, as applicable, shall only be entitled to receive any Base
Salary accrued through such date of termination and any bonus to which he is
entitled pursuant to Section 3(b) of this Agreement.
(b) The Employment Term may be terminated upon thirty (30) days' prior
written notice delivered by Employee to the Company: (i) for "good reason" (for
purposes hereof, "good reason" shall mean only a material reduction of the
Employee's authority, substantial change in work conditions, material decrease
of compensation or benefits, or relocation of his principal workplace in El Paso
to a place over 50 miles from his initial principal workplace hereunder without
Employee's consent) or (ii) upon a Change of Control not consented to by
Employee.
(c) The Employment Term shall be terminable by the Company:
(i) at the Company's option upon thirty (30) days' prior written
notice if, because of injury, illness or other incapacity, whether physical or
mental, Employee becomes unable to perform all or substantially all of his
duties hereunder on a full-time basis for a period of four (4) full months or
more during any six (6) consecutive month period, in which event Employee shall
be entitled to receive Employee's compensation and benefits as shall have been
earned or vested through the date of such
-8-
<PAGE>
determination of disability and retain all then vested rights, privileges, and
benefits;
(ii) at the Company's option upon written notice to Employee in
the event of willful failure by Employee to substantially and materially perform
his duties hereunder (other than any such failure resulting from Employee's
exercise of business judgment or incapacity due to physical or mental illness),
conviction of a fraud on the Company, breach of fiduciary duty involving
material amount of personal gain, material breach of this Agreement, or
engagement of Employee in willful misconduct materially and demonstrably
injurious or detrimental to the Company or its affiliates, in each case which
continues and is not cured by Employee within thirty (30) days (the "Cure
Period") after a written notice and demand for material and substantial
performance is delivered to Employee by the Chief Executive Officer or the Board
of Directors which specifically identifies the manner in which the Board of
Directors believes that Employee has committed breach, engaged in aforementioned
misconduct or fraud, or failed to substantially perform his material duties;
provided, however, notwithstanding any provisions to the contrary herein, such
- -------- -------
Cure Period shall be extended for up to an additional thirty (30) day period in
the event Employee commences cure within the applicable Cure Period and
continues to pursue compliance with reasonable diligence thereafter; or
(iii) Otherwise, at the Company's option, upon thirty (30) days'
prior written notice.
-9-
<PAGE>
Employee agrees that upon any termination of the Employment Term for any
reason he shall resign from all directorships, offices and other positions with
the Company and its subsidiaries and affiliates.
Notwithstanding any provisions to the contrary herein, in the event that
the Employee's employment under this Agreement is terminated pursuant to Section
9(c)(i) or 9(c)(iii), the Company shall continue to pay Employee his then
current Base Salary (prior to any reduction thereof causing such termination)
and the health/insurance benefits to which he is entitled pursuant to Section 8
of this Agreement for twelve months (the "Termination Compensation Period") from
the effective date of such termination. In addition to the extent permitted by
the Company's policies, Employee shall be entitled to continue his and his
family's participation in the Company's medical benefit plan or plans but shall
not be entitled to any other benefits, bonuses or compensation unless otherwise
specifically provided herein. In the event Employee's employment is terminated
pursuant to Section 9(b), Employee shall be entitled to receive his then current
Base Salary until December 31, 1999. In the event Employee's employment is
terminated pursuant to Section 9(c)(ii) hereof, Employee shall only be entitled
to receive salary and benefits (other than bonuses) accrued for periods prior to
the date of such termination.
10. Non-Competition. During the employment of Employee with the Company
---------------
pursuant to this Agreement and during any time within a two-year period after
the date of his termination of employment
-10-
<PAGE>
in accordance with this Agreement, Employee agrees that he shall comply with the
terms and conditions of the Noncompetition Covenant as set forth on Exhibit B
---------
hereto (the "Noncompetition Covenant") and the Nonsolicitation Covenant as set
forth on Exhibit C hereto (the "Nonsolicitation Covenant").
---------
11. Confidentiality. Employee acknowledges that as a result of Employee's
---------------
employment with the Company, Employee will necessarily become informed of, and
have access to, certain valuable and confidential information of the Company,
including, without limitation, trade secrets, technical information, plans,
lists of customers, data, records, fee schedules, computer programs, manuals,
processes, methods, intangible rights, contracts, agreements, licenses, and
personnel information (collectively, the "Confidential Information"), and that
the Confidential Information, even though it may be contributed, developed, or
acquired in whole or in part by Employee, is the Company's exclusive property to
be held by Employee in trust and solely for the Company's benefit. Accordingly,
except as required by law, or for the performance of Employee's duties pursuant
to this Agreement, Employee shall not, at any time during the term of this
Agreement or thereafter, whether or not in the employ of the Company, its
affiliates or their successors, communicate, reveal, report, publish, copy,
divulge, use for the benefit of or otherwise disclose to any person, firm,
corporation or association, any of the Confidential Information of the Company,
its affiliates and/or any related corporation in its business and communicated
to or
-11-
<PAGE>
acquired by Employee while in the employment of the Company or its affiliates;
provided that this Section shall not be violated by the communication or use by
- --------
Employee of information which is or has become publicly known without any breach
by Employee of his obligations under this Section 11. Employee agrees that any
and all files, working papers, tapes, documents, memoranda or other materials
used or prepared by him in the course of his employment shall be and remain the
sole property of the Company. Upon termination of employment, Employee shall
not, without the written consent of the Board of Directors of the Company,
remove any originals or copies of any files, working papers, tapes, documents,
memoranda or other materials of the Company or its affiliates, and shall turn
over to the Company all such materials and deliverable Confidential Information
which are in his possession, custody or control; provided, however, in the event
-------- -------
Employee is alleged to have committed any act or omission which would be grounds
for the termination of this Agreement pursuant to Section 9(c)(ii)(A) hereof, or
Employee requires information relating to personal financial or tax matters,
Employee shall be given access, during normal business hours at the office of
the Company where the materials that he desires to inspect are maintained, to
any confidential information or other materials which Employee reasonably
believes are necessary therefor. Employee shall be permitted, at his own
expense, to make copies of any such Confidential Information to the extent the
same is necessary;
-12-
<PAGE>
provided, that Employee shall not use such copies in a manner that violates this
Section 11.
12. Indemnification.
---------------
(a) The Company shall, to the extent provided in the Amended and
Restated Limited Partnership Agreement of the Company to be dated as of the
Closing (the "Partnership Agreement"), and to the maximum extent permitted by
law, indemnify and hold harmless Employee from any and all losses, damages,
claims or expenses that may be asserted against Employee at any time in
connection with his services for the Company, his employment hereunder or that
may otherwise derive from Employee's employment as contemplated hereby.
(b) The Company may, but shall not be required to, maintain such
insurance for the protection of its officers and directors as is appropriate and
customary for entities engaged in the Company's business.
13. Notices. Any notice, request, demand or other communications required
-------
or permitted to be given under this Agreement shall be in writing and shall be
effective and deemed to have been duly given when delivered personally or on the
earlier to occur of (a) the date of delivery as shown by the return receipt; (b)
four (4) days after the mailing thereof by registered or certified mail, return
receipt requested, with first class postage prepaid; (c) confirmation of receipt
of telecopy; or (d) the day of delivery by a nationally recognized overnight
delivery service. All notices shall be addressed to the person at the addresses
set forth on the signature page hereto. Any party hereto may at any
-13-
<PAGE>
time and from time to time change its address for purpose of receiving notices
by giving notice thereof to the other party as provided in this Section 13. Any
notice which is required to be made within a stated period of time shall be
deemed timely if made before midnight of the last day of such period.
14. Alteration or Amendment. No change or modification of this Agreement
-----------------------
shall be valid unless the same is in writing and signed by all the parties. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the person against whom it is sought to be enforced. The failure of
any party at any time to insist upon strict performance of any condition,
promise, agreement or understanding set forth herein shall not be construed as a
waiver or relinquishment of the right to insist upon strict performance of the
same or any other condition, promise, agreement or understanding at a future
time.
15. Severability. If this Agreement or any portion thereof is, or the
------------
transactions contemplated hereby are, found to be inconsistent or contrary to
any valid applicable laws or official orders, rules and regulations, the
inconsistent or contrary provision of this Agreement shall be null and void and
such laws, orders, rules and regulations shall control and, as so modified, this
Agreement shall continue in full force and effect; provided, however, that
-------- -------
nothing herein contained shall be construed as a waiver of any right to question
or contest any such law, order, rule or regulation in any forum having
jurisdiction.
-14-
<PAGE>
16. Governing Law. This Agreement shall be subject to and governed by the
-------------
laws of the State of Texas regardless of applicable conflict of laws rules or
principles or the fact that either or both of the parties now is or may become a
resident of a different state or country.
17. Benefit and Burden. This Agreement shall inure to the benefit of, and
------------------
shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, and personal representatives. This Agreement shall not be
assignable by Employee, but may be assigned by the Company.
18. Authority. The person executing this Agreement on behalf of the
---------
Company hereby certifies that he or she has full power and authority to execute
and deliver this Agreement on behalf of the Company.
19. Entire Agreement. This document contains the entire agreement between
----------------
the parties. No statement, promises or inducements made by any party hereto, or
agent of either party hereto, which is not contained in this written contract,
shall be valid or binding; and this contract may not be enlarged, modified or
altered except in writing and signed by all the parties.
20. Additional Documents and Acts. In connection with this Agreement, as
-----------------------------
well as all transactions contemplated by this Agreement, each Party agrees to
execute and deliver such additional documents and instruments, provide all
information and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions
and
-15-
<PAGE>
conditions of this Agreement and all such transactions. All approvals of a
Party hereto shall be in writing.
-16-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Employee has executed this Agreement on the date
and year first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ J. A. CARDWELL
-----------------------------------
Name: J. A. Cardwell
---------------------------------
Title: Chief Executive Officer
--------------------------------
Address for Notice:
Post Office Box 26808
--------------------------------------
El Paso, TX 79926
--------------------------------------
--------------------------------------
EMPLOYEE
/s/ LARRY ZINE
--------------------------------------
Larry Zine
Address for Notice:
1225 East Warner Road #16
Tempe, Arizona 85284
-17-
<PAGE>
Exhibit 10.35
PMPA MOTOR FUELS FRANCHISE AGREEMENT
------------------------------------
THIS AGREEMENT is made as of this 30th day of January, 1997 (the "Effective
Date"), by and between Mobil Oil Corporation, a New York corporation having its
principal place of business at 3225 Gallows Road, Fairfax, Virginia 22037
("Mobil"), and Petro Stopping Centers, L.P., a Delaware limited partnership
having its principal place of business at 6080 Surety Drive, El Paso, Texas
79905 ("Petro").
PRELIMINARY STATEMENTS
-----------------------
Mobil and Petro, for good and valuable consideration, have entered into this
PMPA Motor Fuels Franchise Agreement ("Agreement") for the sale of Mobil-branded
diesel fuel and gasoline at Petro's nationwide system of truckstops
("Truckstops") located on the United States interstate highway network, which
system Petro operates directly or franchises through independent franchisees
("the Petro System"), subject to all of the terms and conditions set forth
below. For purposes of this Agreement, "Truckstops" shall mean retail diesel
fueling sites which have as their primary business the sale of diesel fuel or
the furnishing or sale of goods or services to the over-the-road trucking
industry and include, but are not limited to, pumper sites and multi-service
travel plazas. Simultaneously with the execution of this Agreement, Petro and a
Mobil Affiliate have executed a partnership agreement.
ARTICLE 1
PMPA FRANCHISE
--------------
1.1 Establishment of PMPA Franchise. Petro hereby agrees to purchase
-------------------------------
Mobil-brand low-sulfur diesel fuel ("Mobil Diesel") and Mobil-brand
gasoline ("Mobil Gasoline") from Mobil for sale and distribution under
Mobil's trademarks within the Petro System. For purposes of this
agreement, Mobil Diesel and Mobil Gasoline may be collectively
referred to as "Mobil Motor Fuels." By this Agreement, Mobil and Petro
hereby establish a "franchise" and a "franchise relationship", as
defined by the Petroleum Marketing Practices Act, 15 U.S.C. Sections
2801-2806 (the "PMPA"). Mobil hereby grants Petro (a) the right to use
Mobil's trademarks in connection with the retail sale of Mobil Motor
Fuels at Truckstops which are operated by Petro and approved by Mobil
under Section 3.3 ("Petro Br anded Sites"), and (b) the right to grant
Petro's independent franchisees within the Petro System ("Petro
Operators") the use of Mobil's trademarks in connection with the
retail sale of Mobil Motor Fuels at Truckstops ("Operator Branded
Sites"), provided such Petro Operators are supplied Mobil Diesel
and/or Mobil Gasoline by Petro under this Agreement, operate such
Truckstops within the Petro System, and are approved by Mobil under
Section 3.3.
<PAGE>
Petro Branded Sites and Operator Branded Sites are sometimes
collectively referred to in this Agreement as "Branded Sites". The
Truckstops approved by Mobil as of the Effective Date for the sale of
Mobil Diesel are listed on Exhibit A attached hereto. The Truckstops
approved by Mobil as of the Effective Date for the sale of Mobil
Gasoline are listed on Exhibit B attached hereto. The grant of rights
under this Section 1.1 is subject to the detailed provisions of the
remaining Articles and Sections of this Agreement. The grant of rights
under this Section 1.1 applies only to the supply of Mobil Motor Fuels
to Truckstops within the Petro System and is not intended to give
Petro any rights outside the Petro System or any rights with respect
to sites which are not Truckstops or any rights with respect to any
Mobil products other than Mobil Motor Fuels. This PMPA Motor Fuels
Franchise Agreement between Petro and Mobil is separate and distinct
from Petro's business format franchise agreement under which Petro
allows its franchisees to operate "Petro Stopping Centers" travel
centers and to use the Petro trademark.
1.2 Relationship of the Parties. The parties intend for this Agreement to
---------------------------
govern the PMPA franchise and franchise relationship between them and
the purchase, sale and distribution of Mobil Motor Fuels. For purposes
of this Agreement, Mobil and Petro acknowledge that they are separate
business entities, and are not joint venturers, partners, agents or
fiduciaries of each other. Mobil and Petro do not have the power to
bind or obligate each other, except as may be expressly provided
otherwise in this Agreement or any amendments to this Agreement.
1.3 Acknowledgments.
---------------
(a) Petro hereby acknowledges that: (a) Mobil has made a substantial
investment in developing its own numerous marketing premises as
Mobil-branded retail-fuel outlets; (b) Mobil has developed Mobil-
branded retail-fuel outlets throughout the country which are
distinguished by design, trademark, decor, promotions and
graphics; (c) Mobil has built valuable goodwill throughout the
country and has fostered confidence in the motoring public in
Mobil-branded retail-fuel outlets and products bearing Mobil's
trademarks; (d) Mobil has advertised its Mobil products
extensively throughout the country; (e) the continued success of
Mobil, of Mobil dealers, and of Petro as a Mobil distributor, as
well as all other Mobil distributors, is dependent upon each
Mobil distributor and Mobil dealer maintaining the highest
standards of service station and/or facility operation,
cleanliness, product quality, personal commitment to high
performance and customer service; and (f) Petro's conduct and the
conduct and personal performance of Petro Operators will impact
on Mobil's efforts to achieve high standards so long as Petro and
Petro Operators represent the Mobil trademarks and products to
the public.
2
<PAGE>
(b) Mobil hereby acknowledges that: (a) Petro has made a substantial
investment in developing its own franchise system including a
franchise billing system and numerous marketing premises as
"Petro Stopping Center" travel centers; (b) Petro has developed
Petro System locations throughout the country which are
distinguished by design, trademark, decor, promotions and
graphics; (c) Petro has built valuable goodwill throughout the
country and has fostered confidence in the trucking industry in
Petro System locations and products bearing Petro's trademarks;
and (d) Petro has advertised its Petro System extensively
throughout the country.
(c) The parties acknowledge that certain systems, programs, manuals
and other information developed for Mobil-branded retail-fuel
outlets or the Petro System are proprietary. Upon either party
designating any system, program, manual or other information as
being confidential or proprietary, the receiving party will treat
the information accordingly.
1.4 Representations and Assurances. Petro represents to Mobil that Petro
------------------------------
will manage the franchise so as to maintain and enhance the public
acceptance of Mobil's trademarks and Mobil products. Accordingly,
Petro shall manage the franchise so as to meet or exceed Mobil's high
standards of retailing, appearance, customer service and product
quality; to refrain from conduct which will detract from the value of
Mobil's trademarks or which would tend to lower the public acceptance
of Mobil dealers and operators; to conduct its business to ensure that
Petro, at Petro Branded Sites, operates and maintains the business at
a level which meets or exceeds Mobil's high standards; and to exert
commercially reasonable efforts to ensure that Petro Operators, at
Operator Branded Sites, conduct their businesses at a level which
meets or exceeds Mobil's high standards. Without limiting any other
provisions of this Section 1.4, Petro shall meet or exceed at Petro
Branded Sites, and use commercially reasonable efforts to ensure that
Petro Operators meet or exceed at Operator Branded Sites, the minimum
standards as set forth in this Agreement including, without
limitation, the standards under Articles 3, 5, 6, 7 and 8 and Exhibit
F hereto. Mobil represents to Petro that Mobil will supply diesel fuel
and gasoline from the Exhibit D Terminals that meets or exceeds
minimum industry and governmental specifications for same. THESE
OBLIGATIONS AND COMMITMENTS UNDERTAKEN BY MOBIL AND PETRO ARE
REASONABLE AND OF MATERIAL SIGNIFICANCE TO THE FRANCHISE RELATIONSHIP
AND ARE THE VERY ESSENCE OF THIS AGREEMENT.
1.5 Breach of Representations and Assurances. For purposes of this Section
----------------------------------------
1.5 and other sections of this Agreement dealing with Mobil's right to
debrand any Branded Site or
3
<PAGE>
to terminate or non-renew this Agreement, Mobil agrees to provide to
Petro notice of any violations along with a reasonable opportunity to
cure such violations, except in the case of egregious violations such
as misbranding, before it takes action to debrand, terminate or
nonrenew. Petro's failure or refusal to comply with the obligations
outlined in this Agreement at any Branded Site shall constitute
grounds for Mobil's disapproval or withdrawal of approval of such
Branded Site. Petro's continued or widespread failure or refusal to
comply with the obligations outlined in this Agreement shall
constitute grounds for Mobil's termination or nonrenewal of this
Agreement and the franchise relationship between Mobil and Petro. Any
failure or refusal of a Petro Operator at an Operator Branded Site to
comply with the obligations outlined in this Agreement, which shall be
part of any supply agreement between Petro and the Petro Operator with
respect to the sale or distribution of Mobil Motor Fuels, shall
constitute grounds for Mobil's disapproval or withdrawal of approval
of such Operator Branded Site. Upon any such termination, nonrenewal,
disapproval or withdrawal of approval, Petro shall remove, or use
commercially reasonable efforts to cause to be removed, and return to
Mobil, if applicable, any Mobil color schemes, trademarks, brand
names, logos, signs, advertising and other references to Mobil in
connection with the sale or distribution of Mobil Motor Fuels as
provided in Article 3. Any authorizations or contractual agreements
between Petro and any Petro Operator to use Mobil's trademarks is
subject to, and must incorporate, the preceding provisions of this
Section 1.5. Nothing in this Section 1.5 is to be construed to create
any relationship, direct or indirect, between Mobil and any Petro
Operator who shall remain the sole and exclusive franchisee of Petro
with respect to Mobil Motor Fuels.
1.6 Mobil's Rights and Obligations to Establish Other Mobil Branded Retail
----------------------------------------------------------------------
Outlets.
-------
The provisions of Section 1.6 are set forth on Schedule 1 to Exhibit
D.
1.7 Petro's Obligations to Brand the Existing Petro Branded Sites for
-----------------------------------------------------------------
Diesel.
------
(a) Petro shall use and permit Mobil to have installed at Mobil's
sole expense, as allowed by local zoning ordinances and
applicable laws, Mobil's identification signs, trademarks and
color schemes for the sale of Mobil Diesel at the Petro Branded
Sites listed on Exhibit A within the Petro System. In the
alternative, by mutual agreement between the parties, Petro shall
install such signs, trademarks and color schemes and, upon
verification that such work has been completed to Mobil's
standards and specifications and receipt by Mobil of proper
invoices evidencing the completed work, Mobil shall reimburse
Petro for such installation. Petro shall exert commercially
reasonable efforts, subject to all applicable laws, to cause
Petro Operators to sell and distribute Mobil Diesel. All Petro
Operator Sites that have been approved by Mobil for
4
<PAGE>
branding under Section 3.3 and have agreed to sell and distribute
Mobil Diesel will be listed on Exhibit A. Mobil and Petro shall
update such Exhibit A as necessary. Petro shall, in its supply
agreements with Petro Operators who agree to sell Mobil Diesel,
include a provision requiring the Petro Operator to install and
use, as allowed by local zoning ordinances, Mobil's
identification signs, trademarks and color schemes for the sale
of Mobil Diesel at such Branded Site.
(b) If, during the Term, with respect to any Truckstop in the Petro
System operated by Petro, Mobil withholds its approval and
consent under Section 3.3, Petro shall not sell diesel at such
Truckstop under trademarks of any fuel refiner or fuel marketer
other than Mobil, except that Petro may sell diesel at such Petro
Branded Site under Petro's proprietary trademarks and logos
applicable generally to the Petro System. If Mobil withholds its
approval and written consent under Section 3.3 with respect to
any Truckstop in the Petro System operated by Petro because such
Truckstop fails to portray Mobil's image and meet Mobil's high
standards, Petro shall use reasonable efforts promptly to improve
such image and standards to a level reasonably acceptable to
Mobil.
(c) Subject to the terms contained in this Agreement, Petro shall
not, during the Term, enter into an agreement for the sale of
diesel on a branded basis with any fuel refiner or fuel marketer,
other than Mobil, except that Petro may sell diesel at Truckstops
operated by Petro under Petro's proprietary trademarks and logos
applicable generally to the Petro System.
1.8 Petro's Obligations to Brand the Existing Petro Branded Sites for
-----------------------------------------------------------------
Gasoline.
---------
(a) Subject to existing gasoline supply agreements, Petro shall
install and use, as allowed by local zoning ordinances and
applicable laws, Mobil's identification signs, trademarks and
color schemes for the sale of Mobil Gasoline at the Petro Branded
Sites listed on Exhibit B in markets where Mobil sells gasoline
for retail sale or distribution on a Mobil-branded basis. In
addition, Petro agrees to sell Mobil Gasoline at its Truckstops
in El Paso and Vinton, Texas. Petro shall exert commercially
reasonable efforts, subject to applicable laws, to cause Petro
Operators to sell and distribute Mobil Gasoline in markets where
Mobil sells gasoline for retail sale or distribution on a Mobil-
branded basis. All Petro Operator Sites that have been approved
by Mobil for branding under Section 3.3 and that have agreed to
sell and distribute Mobil Gasoline will be listed on Exhibit B.
Mobil and Petro shall update such Exhibit B as necessary. Petro
shall, in its supply agreements with Petro Operators who
5
<PAGE>
agree to sell Mobil Gasoline, include a provision requiring the
Petro Operator to install and use, as allowed by local zoning
ordinances and applicable laws, Mobil's identification signs,
trademarks and color schemes for the sale of Mobil Gasoline at
such Branded Site.
(b) Subject to existing gasoline supply agreements, Petro shall not
sell gasoline at any Truckstop operated by Petro that is located
in an area listed on Exhibit H, and for which Mobil has withheld
its approval and consent under Section 3.3, under trademarks of
any fuel refiner or fuel marketer other than Mobil, except that
Petro may sell gasoline at such Petro Branded Site under Petro's
proprietary trademarks and logos applicable generally to the
Petro System. If Mobil withholds its approval and written consent
under Section 3.3 with respect to any Truckstop in the Petro
System operated by Petro because such Truckstop fails to portray
Mobil's image and meet Mobil's high standards, Petro shall use
reasonable efforts promptly to improve such image and standards
to a level acceptable to Mobil.
(c) Subject to the terms contained in this Agreement, Petro shall
not, during the Term, enter into an agreement for the sale of
gasoline on a branded basis with any fuel refiner or fuel
marketer, other than Mobil, except that Petro may sell gasoline
at Truckstops operated by Petro under Petro's proprietary
trademarks and logos applicable generally to the Petro System and
except that Petro may sell gasoline on a branded basis at
Truckstops located in geographic areas other than those listed in
Exhibit H if Mobil timely notifies Petro under Section 3.3 that
it does not desire to supply Mobil Gasoline for retail sale at
the location.
(d) Notwithstanding the preceding provisions of this Section 1.8, the
following applies:
(i) If on the Effective Date a Truckstop in the Petro System
operated by Petro is subject to a gasoline supply
agreement on a branded basis with a refiner or fuel
marketer other than Mobil, such Truckstop may continue to
remain branded under the trademarks of that refiner or
fuel marketer for the duration of the then current term of
such supply agreement unless it can be terminated earlier.
Except as provided below in this Section 1.8(d)(i), Petro
shall not extend or renew such supply agreement beyond its
term. Petro shall provide Mobil written notice at least
sixty (60) days prior to the termination or expiration of
the term of such supply agreement which notice must
specify the Truckstop, the termination or expiration date
and the supplier under
6
<PAGE>
such supply agreement. Upon termination or expiration of
the then current or any future term of such supply
agreement, the following applies:
(1) If Mobil notifies Petro, within a period of time
sufficient for Petro to make alternate supply
arrangements, that Mobil desires to have gasoline
sales at the Truckstop branded Mobil, Petro shall not
extend or renew such agreement and shall not sell
gasoline at such Truckstop under the trademarks of
any refiner or fuel marketer other than Mobil (except
Petro's proprietary trademarks and logos applicable
generally to the Petro System). This Section
1.8(d)(i)(1) is subject to Section 1.8(d)(i)(3).
(2) If Mobil does not notify Petro, within a period of
time sufficient for Petro to make alternate supply
arrangements, that Mobil desires to have gasoline
sales at the Truckstop branded Mobil, Petro may renew
its supply agreement with such other refiner or fuel
marketer or other supplier on comparable terms for an
additional term. The provisions of Section 1.8(d)(i)
will apply to any future termination of such supply
agreement or the expiration of such additional term.
If Petro does not renew such supply agreement or such
supply agreement otherwise terminates, Section
1.8(d)(ii) will apply to gasoline sales at the
Truckstop following the expiration or termination of
such supply agreement.
(3) If Mobil notifies Petro of its desire to brand
gasoline sales under Section 1.8(d)(i)(1) and if
Petro cannot, pursuant to terms of the agreement or
by applicable law, terminate or nonrenew the supply
agreement on a branded basis with a refiner or fuel
marketer other than Mobil, then such Truckstop may
continue to remain branded under the trademarks of
that refiner or fuel marketer as required by law or
by any applicable agreement.
(ii) If on the Effective Date a Truckstop in an area listed on
Exhibit H is not subject to a gasoline supply agreement on
a branded-basis with a refiner or fuel marketer other than
Mobil, and Mobil does not desire to have Mobil Gasoline
sales at such Truckstop, Petro shall not sell gasoline at
such Truckstop under trademarks of a refiner or fuel
marketer other than Mobil (except Petro's proprietary
trademarks and logos applicable generally to the Petro
System). However, if on the
7
<PAGE>
Effective Date a Truckstop is not in an area listed on
Exhibit H and Mobil does not desire to have Mobil Gasoline
sales at such Truckstop, Petro may sell gasoline at such
Truckstop under any trademark, including that of a refiner
or fuel marketer other than Mobil.
(iii) This Section 1.8 applies to the sale by Petro of, and
restricts the rights of Petro to sell, gasoline fuel,
subject to existing gasoline supply agreements and in
compliance with applicable law, only in those states
specified in Exhibit H attached hereto (geographic areas
of Mobil's marketing efforts), which Exhibit H may be
amended from time to time in Mobil's sole discretion upon
reasonable notice to Petro.
1.9 Petro's Obligations to Brand New Petro Sites Mobil Diesel
---------------------------------------------------------
Excluding all existing Franchisees, Petro will sell, or will cause its
Operators to sell, subject to applicable law and existing supply
agreements, Mobil Diesel at any new Petro Truckstop Site that Mobil
desires to sell Mobil Diesel, including Petro Operated Sites, during
the Term. At the expiration of any existing supply agreement, Petro
will sell, if Mobil approves, Mobil Diesel.
1.10 Petro's Obligations to Brand New Petro Sites Mobil Gasoline
-----------------------------------------------------------
Excluding all existing Franchisees, at all new Petro Truckstop Sites
located in areas listed on Exhibit H at which Mobil desires to sell
Mobil Gasoline, including sites operated by Petro Operators, Petro
will sell, or will cause its Operators to sell, subject to applicable
law and existing supply agreements, on terms and conditions provided
herein and in the supply agreement between Petro and the Petro
Operator, Mobil Gasoline at such Site during the Term. At the
expiration of any existing supply agreement, Petro will sell, if Mobil
requests, Mobil Gasoline. For all new Petro Branded Sites not located
in areas listed on Exhibit H at which Mobil does not desire to sell
Mobil Gasoline, including sites operated by Petro Operators, Petro may
sell, and allow its Operators to sell, any gasoline including gasoline
supplied under the trademark of a refiner or fuel marketer. For all
new Petro Truckstop sites located in areas listed on Exhibit H at
which Mobil does not desire to sell Mobil Gasoline, including sites
operated by Petro Operators, Petro may sell gasoline at such Truckstop
under Petro's proprietary trademarks and logos applicable generally to
the Petro System.
1.11 No Franchise Relationships Between Mobil and Petro Operators
------------------------------------------------------------
8
<PAGE>
NOTHING CONTAINED IN THIS AGREEMENT IS TO BE CONSTRUED AS CREATING A
FRANCHISE OR FRANCHISE RELATIONSHIP BETWEEN MOBIL AND ANY PETRO
OPERATOR WITH RESPECT TO THE SALE OR SUPPLY OF DIESEL OR GASOLINE
UNDER THE PMPA OR UNDER ANY OTHER FEDERAL OR STATE LAW. Any franchise
or franchise relationship covering the sale or supply of Mobil-branded
diesel or gasoline to Petro Operators shall exist only if, and upon
the terms of, a separate written agreement between Petro, on the one
part, and the Petro Operator, on the other part.
1.12 Term of Agreement. The term of this Agreement shall be for a fixed
-----------------
period of ten (10) years, commencing on the Effective Date, unless
terminated earlier under this Agreement (the "Term").
ARTICLE 2
GENERAL SALES TERMS
-------------------
2.1 Terminal Locations, Price, Quantities - Product from Mobil Sources
-------------------------------------------------------------------
(a) First Agreement Year. From the Effective Date through the first
full Calendar Year of this Agreement, the Exhibit D Terminal
locations, minimum monthly annual quantities and prices for the
supply of Mobil Motor Fuels for designated Branded Sites are as
listed in Exhibit D.
(b) Terminal and Quantity Changes.
(i) Substitution Rights. Mobil has the right, but not the
obligation, on at least four (4) hours' prior notice by
telephone to Petro, to substitute another terminal for any
of the Exhibit D Terminals, unless the substituted
terminal increases by more than ten (10) miles the
distance measured one way that Petro must haul Mobil Motor
Fuel to each Branded Site served by the original terminal.
Such substitution may be at any time and from time to time
and for such periods as Mobil may advise Petro. Nothing
provided in this Section 2.1(b)(i) may be construed as
preventing Mobil from arranging to cover supply disruption
as provided in Section 13.4 of the Agreement. Upon and
during the period of such substitution, such terminal
shall be considered an Exhibit D Terminal for all purposes
and the quantity and price provisions relating to the
original terminal will continue to apply to Mobil Motor
Fuels lifted from such substitute terminal.
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<PAGE>
(ii) Quantity Reductions and Deletions. Upon written notice to
Petro at any time and from time to time, Mobil may also,
in its reasonable discretion, reduce or delete the minimum
monthly or annual quantities of Mobil Motor Fuels from any
Exhibit D Terminal. Upon such reduction or deletion, the
Branded Sites affected by the reduced or deleted
quantities will be supplied from alternate source(s)
pursuant to Section 2.6. Mobil may offer to supply to
Petro all or a portion of the reduced or deleted
quantities from a terminal other than an Exhibit D
Terminal. Such quantity must be offered by Mobil to Petro
at a price equal to the greater of: (1) the price of the
original reduced or deleted quantity; or (2) the lowest
comparable price (as determined under Section 2.3(c)(ii)
of the Agreement) available to Petro in the market area(s)
of the Branded Site(s) unless Mobil and Petro mutually
agree to a price. If Petro accepts such quantity, the
parties shall amend Exhibit D to include the Branded Site,
new terminal, quantity and price accordingly and such
terminal will be deemed an Exhibit D Terminal. If Petro
rejects such quantity, such Branded Site(s) will continue
to be supplied from alternate sources in accordance with
this Agreement. If Mobil deletes or reduces a minimum
monthly or annual quantity of Mobil Motor Fuels for any
Exhibit D Terminal and does not offer to supply all or any
portion of deleted or reduced quantities as outlined in
this Section 2.1, the Reference Volume will be reduced by
an appropriate amount for purposes of the calculation of
the Annual Price Adjustment for the Calendar Year of such
deletion or reduction. In any other event, the Reference
Volume for purposes of calculation of the Annual Price
Adjustment will not be reduced. For any subsequent
Calendar Year, Mobil may reinstate all or any part of the
deleted or reduced quantities and the Reference Volume
will be increased accordingly.
(iii) A deletion or reduction of quantities by Mobil under this
Section 2.1(b) is not to be construed as a request for an
amendment under Section 2.3(c)(1) of the Agreement.
(c) Suspension, reduction, deletion of product quantities. Petro may
request a temporary or permanent suspension, reduction or
deletion of product quantities listed on Exhibit D based on
events beyond its reasonable control. If Mobil agrees to such
suspension, reduction or deletion, the Reference Volume will be
reduced accordingly.
10
<PAGE>
(d) Amendment by Mutual Agreement. Upon mutual agreement to amend
Exhibit D, the parties may at any time add, substitute or delete
terminals to or from the Exhibit D Terminals and modify related
prices or quantities, provided such amendment will not affect
Petro's obligation to pay to Mobil the Annual Price Adjustment in
any Agreement Year.
(e) If Petro acquires a new Petro Branded Site that is a Full Service
Travel Center for the sale of Mobil Diesel and Mobil approves it
for the sale of Mobil Diesel pursuant to Section 3.3 and Mobil
agrees to supply diesel fuel to the new Petro Branded Site from
Exhibit D Terminals (as Exhibit D may be amended from time to
time), the "Reference Volume" as defined in Section 2.4(g) will
be increased by the greater of six (6) million gallons or the
volume Mobil agrees to supply annually effective commencing three
(3) months after the Petro Branded Site is open and operating for
the sale of diesel fuel. The increase in the "Reference Volume"
for the first operating year for each new Petro Branded Site will
be prorated accordingly if the effective date is during any
Calendar Year. Upon the effective date of the increase in the
Reference Volume, the Annual Price Adjustment will be calculated
using the Reference Volume as increased. If Mobil does not agree
---
to supply the new Petro Branded Site with any diesel fuel from an
Exhibit D Terminal (as amended), the Reference Volume will not,
merely because of the new Petro Branded Site, increase.
2.2 Products.
--------
(a) The Mobil products to be bought and sold under this Agreement are
Mobil Diesel and Mobil Gasoline. In addition, Petro shall
purchase Mobil lubricants pursuant to an agreement substantially
similar to the agreement attached hereto as Exhibit C. The
lubricants agreement, when executed, is a separate agreement
between Mobil and Petro and is not a part of the franchise
relationship which is the subject of this PMPA Motor Fuels
Franchise Agreement. Mobil may, at any time and from time to
time, on written notice, change the grade, specifications,
characteristics, product name, or other distinctive designation
of such Mobil product so long as such change does not result in a
decrease in product quality and is in compliance with all
applicable laws. Such product as so changed remains subject to
this Agreement. Whenever reasonably possible, Mobil shall use
reasonable efforts to provide Petro with at least ninety (90)
days' prior written notice of any significant changes in product
specifications or designations. Should Mobil change the product
name or other distinctive designations of such Mobil product, and
such change results in Petro incurring costs, Mobil shall bear
the costs of such
11
<PAGE>
changes, if necessary and reasonable, including but not limited
to, the cost of pumping or cleaning tanks, replacement of all
signs containing such product name and/or other distinctive
designations.
(b) Petro shall be obligated to purchase such product, as changed,
except as provided in this Section 2.2(b). In the event a diesel
product change results in a substantially different product which
causes financial hardship to Petro or results in a lower quality
product, Petro may, by furnishing Mobil written notice within
sixty (60) days following Mobil's written notice to Petro of such
product change, request an alternate source of diesel product. If
the grade, specifications and characteristics of the alternate
product meets or exceeds the minimum industry specifications for
such product and the alternate source supplier agrees to Mobil's
alternate source procedure as defined in this Agreement, and if
Petro can substantiate financial hardship or proof that the
product is of lower quality, Mobil shall approve such alternate
source. Petro's notice must specify the basis for Petro's claim
of financial hardship. Failure to request timely an alternate
source of diesel product is conclusively deemed a waiver by Petro
of such right as it relates to such diesel product change. Any
dispute regarding the application of this Section 2.2(b) is to be
resolved in accordance with Section 16.13.
(c) Petro may additize Mobil Diesel only in accordance with
applicable laws and generally recognized industry standards and,
even then, only with Mobil's prior written approval, which shall
not be unreasonably withheld, conditioned or delayed. Petro shall
not represent or advertise, or allow the representation or
advertisement of, any additized Mobil Diesel as a Mobil premium
product or as a product with Mobil additive. Subject to this
Section 2.2(c), Mobil hereby approves Petro selling Petro Power
Plus, under that or any other name, as an additive. Petro will
ensure that all Petro Power Plus decals at all Mobil approved
locations will comply with this Section 2.2(c) within ninety (90)
days of being approved for the sale of Mobil Diesel. Petro Power
Plus signage and brochures must reflect that it is an additive
combined with the base diesel product and not a premium product.
2.3 Quantities.
----------
(a) During the Term and pursuant to the terms of this Agreement,
Mobil shall sell to Petro either directly or indirectly through a
subsidiary or an affiliate of Mobil, and Petro shall purchase
from Mobil or such subsidiary or affiliate, all diesel fuel to be
sold at Branded Sites within the Petro System. Petro shall not
resell Mobil Diesel to any person or entity except to Petro
Operators for resale
12
<PAGE>
at Operator Branded Sites or except to Petro's retail customers
at Petro Branded Sites. Petro shall purchase from Mobil, to the
extent that supply is available from Mobil, at least the monthly
minimum quantities of Mobil Diesel set forth in Exhibit D. For
the first full Calendar Year during the term of this Agreement,
Petro shall purchase from Mobil at least the monthly and annual
minimum quantities of Mobil Diesel set forth in Exhibit D. Such
quantities shall be sourced from Mobil terminals or third-party
terminals arranged by Mobil as specified in Exhibit D (the
"Exhibit D Terminals"). "Calendar Year" means a twelve-month
period commencing on January 1. For the purposes of this
Agreement, the sales, supply and payment arrangements for any
quantities sourced from third-party terminals arranged by Mobil
may be carried out by a subsidiary or an affiliate of Mobil.
Further, an affiliate or subsidiary of Mobil shall be an entity
more than 50% of the voting stock of which is owned directly or
indirectly by Mobil or Mobil Corporation.
(b) As gasoline supply agreements expire and Mobil is able to approve
the Branded Sites for the sale of Mobil Gasoline, during the Term
Mobil shall sell to Petro, and Petro shall purchase from Mobil,
gasoline to be sold at certain Branded Sites within the Petro
System as required and approved under Section 3.3 by Mobil. Petro
shall not resell Mobil Gasoline to any person or entity except to
Petro Operators for resale at Operator Branded Sites or except to
Petro's retail customers at Petro Branded Sites. Petro shall
purchase from Mobil, to the extent that supply is available from
Mobil, at least the monthly quantities of Mobil Gasoline set
forth in Exhibit D upon the site being branded for the sale of
Mobil Diesel. For the first full Calendar Year during the term of
this Agreement, Petro shall purchase from Mobil, subject to
existing gasoline supply contractual obligations, at least the
monthly and annual minimum quantities of Mobil Gasoline set forth
in Exhibit D. Such quantities shall be sourced from the Exhibit D
Terminals. Should any Branded Site not satisfy the minimum
gasoline purchase requirements as set forth on Exhibit D, Mobil's
sole remedy shall be the disapproval or debranding of such
site(s).
(c) For each succeeding Calendar Year, Petro shall purchase from
Mobil at least the monthly and annual minimum quantities of Mobil
Diesel set forth in Exhibit D, except to the extent that the
terminals, quantities and prices in Exhibit D are amended as
follows:
(i) By furnishing written notice to the other party at least
sixty (60) days prior to the beginning of a Calendar Year,
or at any time during such Calendar Year if competitive
conditions change significantly, either
13
<PAGE>
party may request amendment of Exhibit D for such Calendar
Year. If the parties mutually agree to the requested
amendment, the amendment shall take affect effect January
1 of the Calendar Year or as mutually agreed to during the
Calendar Year, respectively. To the extent that the
parties do not mutually agree to the requested amendment,
Exhibit D will remain unchanged for the next Calendar Year
or for the remainder of the current Calendar Year,
respectively. Whether or not a party makes a timely notice
requesting such amendment for any Calendar Year, in no
event may the price in effect with respect to any Exhibit
D Terminal for any Calendar Year be less than the lowest
comparable price then available to Petro within the market
area of such terminal for such Calendar Year and the
parties shall amend Exhibit D and take such other action
as may be required to adjust such price so that it is no
lower than such lowest comparable price. Comparability
under this Section 2.3(c)(i) will be determined in
accordance with the requirements under Section 2.3(c)(ii)
for third-party offers. In no event shall Mobil be
required to offer to Petro the lowest comparable price for
diesel at any Exhibit D Terminal during the Term. Petro
may request that Mobil meet any lowest comparable price
for diesel and Mobil reserves the right to offer such
lowest comparable price. If Mobil offers to sell Mobil
Diesel to Petro for the next Calendar Year at a price that
is $.0025 higher than a comparable competitor's price
available to Petro, Mobil may agree to meet the comparable
competitor's price for the next Calendar Year. If Mobil
agrees to such price for Mobil Diesel, Exhibit D will be
amended accordingly. If Mobil declines to meet such
comparable price, Petro may either accept Mobil's offer
price or designate an alternate source for diesel supply.
If the diesel product from the alternate source of supply
meets or exceeds the minimum industry or governmental
specifications and the alternate source supplier agrees to
the alternate source procedures contained in this
Agreement, Mobil shall promptly approve such alternate
source of diesel supply. However, this change in supply
source in no way affects Petro's obligations to purchase
150,000,000 gallons of diesel from the Exhibit D Terminals
nor affects Petro's obligations relating to the Annual
Price Adjustment.
(ii) If a party furnishes timely written notice under Section
2.3(c)(i) requesting an amendment to Exhibit D, such party
shall include in such notice its requested price, quantity
or terminal location changes, with certification that any
requested diesel price changes are based on comparable
third-party bona fide offers. To be comparable, an offer
14
<PAGE>
must: (i) be available to Petro from Mobil's competitors;
(ii) relate to the supply of diesel comparable in quality
and quantity to Mobil Diesel under this Agreement; (iii)
apply to the entire applicable Calendar Year; and (iv) be
substantially comparable in all other material and
relevant respects, including without limitation, terminal
location, credit terms and discounts. Any requested price
change not timely supported by Petro's representation
(verbal or in writing) of a comparable third-party bona
fide offer will automatically be rejected. All diesel
price changes requested under this Section must include
designation of the destination of the Mobil Diesel (i.e.,
location of the Branded Site), the terminal and quantity
of Mobil Diesel to which such price applies. Any price
changes offered by Mobil for Mobil Diesel will be
expressed as the OPIS Discount off the Daily OPIS Contract
Average Price (as these terms are defined below) quoted
for the OPIS reference city specified in Exhibit D.
(iii) Following the receiving party's receipt of the requested
changes, with proper certification in the case of
requested price change to meet a competitive offer, the
parties shall meet to review and discuss the requested
changes. After such meeting, the receiving party shall
furnish the requesting party with written notice
indicating whether the receiving party accepts or rejects
the requested changes. If a requested change is accepted,
the provisions of this Section 2.3(c) apply. If a
requested change is rejected for any reason by the
receiving party, the receiving party will provide to the
requesting party the reason for the rejection. The
rejected change, if properly rejected, will be excluded
from further consideration under this Section 2.3(c).
(iv) If, for any reason, mutual agreement to the requested
amendment of Exhibit D as provided in this Section 2.3(c)
has not been achieved by the beginning of the Calendar
Year to which the requested changes apply, the prices,
terminals and quantities for the preceding Calendar Year
shall remain in effect until amended by mutual agreement.
Upon the subsequent amendment of Exhibit D, the amended
purchase price, terminals and quantities for such Calendar
Year shall apply from the date of such amendment, and not
be retroactively adjusted.
(v) Nothing contained in this Section 2.3 may be construed as
reducing, limiting or otherwise affecting Petro's
obligation to pay to Mobil the Annual Price Adjustment
under Section 2.4.
15
<PAGE>
(d) In any calendar month, Petro shall not lift more than one hundred
ten percent (110%) of the monthly volumes set forth in Exhibit D
from any Exhibit D Terminal (the "Monthly Maximum Quantity")
without Mobil's prior approval. If Petro breaches its obligation
not to exceed the Monthly Maximum Quantity for any Exhibit D
Terminal, Mobil may, among other remedies available to it,
restrict Petro, after reasonable notice, from any further
liftings at such terminal for the balance of the current Calendar
Year. If Mobil imposes such restriction, the Branded Sites
supplied by such terminal will be supplied from alternate sources
and such restriction will not reduce, limit or otherwise affect
Petro's obligation to pay Mobil the Annual Price Adjustment under
Section 2.4. Mobil may elect from time to time to waive in
writing Petro's obligation not to make excess liftings at any
terminal and such waiver will not preclude Mobil from
reinstating, with prior reasonable notice, such obligation for
future liftings at that terminal. Mobil's waiver of such
obligation at one terminal is not to be construed as a waiver of
Petro's obligations at any other terminal.
2.4 Price.
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The provisions of Section 2.4 are set forth on Schedule 2 to Exhibit
D.
2.5 Product Lifting. Except for Mobil Motor Fuels destined for the
---------------
Delivered Sites, as that term is defined in this Section 2.5, Petro
will lift product purchased pursuant to this Agreement in accordance
with Mobil's reasonable, or any applicable third-party terminal-
operator's, procedures, which are subject to change by Mobil in its
reasonable discretion or such operator at their sole discretion. If
Petro lifts less than 90% of its monthly minimum contract volume for
diesel at an Exhibit D terminal for two (2) consecutive months, Mobil
may, at its option and subject to Section 2.1, either terminate
Petro's right to lift diesel product from such Exhibit D Terminal or
reduce the volume of Mobil Diesel for such terminal under Exhibit D to
the monthly average of Petro's actual liftings for such two-month
period. Subject to Section 2.1, such reduction will not reduce or in
any way affect Petro's obligation to pay the Annual Price Adjustment
for such year. "Delivered Sites" are the Petro Operated Sites located
at: Kingman, Arizona; Shorter, Alabama; and Shreveport, Louisiana.
Mobil agrees to make arrangements to deliver Mobil Motor Fuels to the
Delivered Sites. Petro agrees to pay Mobil the Freight Adjustment as
indicated on Exhibit D. The Freight Adjustment may change and Mobil
agrees to provide reasonable notice of such change to Petro.
2.6 Alternate Source Procedures.
---------------------------
16
<PAGE>
The provisions of Section 2.6 are set forth on Schedule 3 to Exhibit
D.
2.7 Deliveries. Except for Mobil Motor Fuels delivered to the Delivered
----------
Sites, Delivery occurs, and title and risk of loss pass to Petro, at
the terminal rack at the time of loading into a tank truck. Mobil
shall have the right at anytime to designate delivery points as
provided in Section 2.1. Except for deliveries made to the Delivered
Sites or as may otherwise be agreed in writing by Mobil,
transportation from the applicable delivery point shall be arranged
for and paid by Petro. For Delivered Sites, delivery occurs, and title
and risk of loss pass to Petro at the Site at the time of delivery
into the product storage tanks. For Delivered Sites, transportation
from delivery point shall be arranged for and paid by Mobil.
2.8 Product Receipt; Delay Charges. Petro shall arrange promptly to
------------------------------
receive delivery at designated terminals or Branded Sites and, except
for Delivered Sites, shall arrange, at its sole cost and expense, for
the transport of all Mobil Motor Fuels from such terminals. Petro, or
its carrier, shall execute such terminal access agreements as may be
required by any applicable third-party terminal operator or as may
reasonably be required by Mobil. Petro shall pay and incur without
reimbursement all charges relating to deliveries including, without
limitation, applicable demurrage, rerouting or storage charges or
expenses.
2.9 Methods of Payment. Except as otherwise provided by Mobil and within
------------------
thirty (30) days following receipt of Mobil's invoice, all amounts due
Mobil under this Agreement are payable by Petro through Mobil's
Automated Direct Debit System (ADDS), or such other reasonable methods
of payment as Mobil may specify. Mobil reserves the right to charge
Petro fees, costs or other charges permitted by law for any checks,
bank debits or electronic transfers by or from Petro which are not
honored by the bank or are otherwise returned by the bank, and to
charge Petro any finance charge or other charges for delinquent
payments as may be permitted by law. Petro shall pay all undisputed
amounts on disputed invoices for product supplied from Exhibit D
Terminals when due. The parties agree to cooperate in the resolution
of any disputed amounts for product supplied from Exhibit D Terminals.
In the event that Petro continuously, without substantiation, disputes
Mobil's invoices for product supplied from Exhibit D Terminals, Mobil
reserves the right to require Petro, upon reasonable advance written
notice, to pay all future invoices in full upon receipt, including any
disputed amounts. In such event, Mobil will reimburse Petro any
amounts determined to be due Petro upon resolution of the dispute. For
product supplied from alternate sources, Mobil will cause the payment
of such supplier's invoice in full unless Petro advises Mobil that it
disputes the supplier's invoice. Upon such notice from Petro, Mobil
shall suspend payment of said invoice until Petro resolves the dispute
with the alternate source supplier. Upon resolution, Mobil will
17
<PAGE>
pay the supplier as directed by Petro. Petro shall exert commercially
reasonable efforts to resolve such disputes with the alternate source
supplier and shall indemnify and hold Mobil (including its affiliate
or subsidiary referenced in Section 2.6) harmless from and against any
losses, damages, claims, etc. relating to Petro's dispute of an
alternate source supplier's invoice.
2.10 Credit and Security.
-------------------
(a) Mobil may extend credit to Petro on such terms and conditions as
Mobil may determine in its reasonable discretion. If requested
and subject to approval by Petro's Board of Directors or
equivalent successor body, Petro shall provide and maintain a
letter of credit or shall deposit, assign or pledge security to
Mobil in such amounts, forms and for such periods of time as
Mobil may determine adequate to secure Petro's credit limit,
which shall be established in the sole discretion of Mobil. The
amount and type of credit and/or security required of Petro may
be changed by Mobil from time to time at its sole discretion by
giving notice to Petro, which shall be effective immediately
unless otherwise specified by Mobil. Petro agrees that Mobil may
use, without prior demand on Petro, any or all such security to
satisfy any indebtedness or other obligation to Mobil including,
but not limited to, indebtedness arising from purchases under
this Agreement. Subject to existing applicable agreements, Petro
shall execute a Security Agreement, a Financing Statement, a
Purchase Money Security Interest and/or any such other financial
documents as Mobil may reasonably require. In the event Petro
defaults in the payment of any indebtedness to Mobil, including
without limitation indebtedness arising from purchases under this
Agreement, or otherwise fails to comply with any credit terms
imposed by Mobil, in addition to any other rights it may have,
Mobil shall have the right immediately to suspend deliveries of
all Mobil products and to apply any security which Petro may have
given to Mobil and any funds which Mobil may have on deposit to
the payment of any such indebtedness. Petro agrees that, in the
event Petro's account is placed for collection, it shall pay all
costs and reasonable attorneys' fees associated with such
collection proceedings if Mobil prevails.
(b) Petro agrees to provide to Mobil, annually or, if requested,
quarterly, Petro's most current financial statement(s) and such
other documentation as may be necessary, in Mobil's sole
judgment, to evaluate the financial condition of Petro. In
addition, Petro agrees to notify Mobil of any material changes or
events relative to its corporate and financial status or
condition, including without limitation, to give thirty (30)
days' prior written notice of any proposed change greater than
30% in partnership or corporate structure or
18
<PAGE>
ownership, such as a stock sale or transfer, corporate
reorganization, merger, acquisition or any other such corporate
structural change. Petro also agrees to give Mobil written notice
within thirty (30) days of any liens or judgments in excess of
$100,000 filed against Petro. Notices pursuant to this Section
2.10(b) shall be sent by certified mail to Mobil Oil
Corporation's Credit Department.
2.11 Discontinuance of Products. Mobil reserves the right to discontinue,
--------------------------
without liability, the sale of the Mobil products covered by this
Agreement. In the event that Mobil discontinues the sale of any Mobil
product, Mobil shall have the right, but not the obligation, to
substitute another product of substantially the same quality for the
one discontinued. Mobil will make good faith efforts to provide at
least ninety (90) days' prior written notice to Petro of any
substitution, whenever reasonably feasible. Mobil's substitution of
products under this Section 2.11 is subject to Section 2.2(a).
ARTICLE 3
TRADEMARK PROTECTION; PRODUCT QUALITY CONTROL
---------------------------------------------
3.1 Trademarks. Mobil hereby grants Petro the right to resell Mobil Motor
----------
Fuels covered by this Agreement under Mobil's trademarks only within
the Petro System and only in accordance with the terms of this
Agreement. Subject to this Article 3, Petro has the right to use
Mobil's trademark to identify and advertise Mobil Motor Fuels. Mobil
only has the right to designate products sold under this Agreement as
Mobil Diesel or Mobil Gasoline. Nothing herein contained may be
construed as a waiver of any law, ordinance, regulation, lease and/or
contract prohibiting the use of Mobil-brand dispensing facilities for
the storage and sale of non-Mobil branded products. Petro shall not
use Mobil's trademarks or brand names for any purpose, or in any
manner which may confuse or deceive the public, or in any manner which
Mobil in its reasonable discretion may disapprove. Petro acknowledges
that Mobil is the sole and exclusive owner of the Mobil trademarks and
nothing in this Agreement and no act or failure on the part of Mobil
shall give Petro any ownership interest or ownership right in the
Mobil trademarks or the goodwill associated with those trademarks.
3.2 Advertising and Promotional Materials. Without limiting the provisions
-------------------------------------
of Article 6, all advertising and promotion of Mobil Motor Fuels,
including without limitation signage, lettering and color scheme, must
conform to Mobil's graphics standards. Mobil shall provide to Petro,
pursuant to Article 10, its approved signs advertising Mobil Diesel
for the initial branding of any Branded Site. These signs, as of the
Effective Date, include Mobil's High Rise I.D. Sign, Mobil Canopy
Legend, diesel decals for all diesel dispensers and up to four (4)
exit signs for each site. The signs
19
<PAGE>
shall be used solely for the sale of Mobil Diesel and shall be in such
quantities and for such locations and placement at Truckstops within
the Petro System as shown on Exhibit I or as the parties may mutually
agree. With respect to advertising and promotional materials related
to the resale of Mobil Gasoline, Mobil shall give, sell or lease from
time to time its customary signs advertising Mobil Gasoline products.
The signs shall be used solely for the sale of Mobil Gasoline products
and shall be in such quantities and for such locations as Mobil may
approve. Petro shall take delivery, erect, install and maintain said
signs at Petro's sole expense. For gasoline branding and signage,
Petro may participate in Mobil's regional Distributor Image Incentive
Program, as amended or discontinued from time to time, or may request
that Mobil meet an image incentive offer of a competitor. Mobil shall,
subject to a minimum image incentive offer of 1c per gallon for first
year EYG (Estimated Yearly Gallons) and subject to a maximum image
incentive offer of 1c per gallon over Mobil's then current regional
Distributor Image Incentive Program offer, meet the competitor's
offer. Once satisfactorily installed, Petro shall maintain, repair and
replace said diesel and gasoline signs, including but not limited to
bulb and face replacement, at Petro's sole expense. Without limiting
the provisions of Article 6, all printed material and all advertising
used by Petro or Petro Operators in connection with the sale or
distribution of Mobil Motor Fuels which includes a facsimile of the
Flying Red Horse, the MOBIL logo, Mobil slogans or any other Mobil
trademark must be approved in advance by Mobil and Mobil agrees to
approve/disapprove printed material and advertising within ten (10)
business days of receipt. On such terms and conditions as Mobil may
establish, Mobil may furnish to Petro sales promotional material of
the kind and in such quantities as Mobil may determine. In addition,
Petro will purchase annual signage packages for national gasoline
promotions. Petro will consider participating in, but will not be
obligated to participate in, any regional gasoline marketing programs.
Petro will exert commercially reasonable efforts to cause Petro
Operators to participate in national and regional Mobil Gasoline
promotions.
3.3 Approval of Use of Mobil Trademarks at Branded Sites. Petro shall
----------------------------------------------------
obtain Mobil's approval and prior written consent, which shall not be
unreasonably withheld, conditioned or delayed, to use, or allow the
use of, any Mobil identification, sign, logo, slogan, trademark or
color scheme at any Truckstop within the Petro System operated or
supplied by Petro. Mobil shall respond to Petro's request for approval
to use, or allow the use of, any Mobil identification, sign, logo,
slogan, trademark or color scheme within twenty (20) business days of
receipt of the request. Mobil may approve the installation and use of
Mobil's identification signs, logos, slogans, trademarks and color
schemes for such Truckstops reselling Mobil Diesel operated by or
supplied by Petro if, in Mobil's reasonable judgment, such Truckstop
will comply with the provisions of this Agreement relating to Branded
Sites and portray
20
<PAGE>
the image and provide the high standards of service Mobil expects from
locations reselling Mobil Diesel under Mobil's trademarks. Petro at
its cost shall promptly remove and return all signs, advertising or
promotional materials when no longer required or when Mobil withdraws
its approval for use of such signs, advertising or promotional
materials at any location unless Mobil approves the transfer of the
sign to another location. Notwithstanding the preceding sentences of
this Section 3.3, in the event of a violation of this Agreement by
Petro or any Petro Operator, Petro agrees that upon fifteen (15)
business days' written notice from Mobil, except in the case of
egregious violations such as misbranding for which Mobil will provide
notice reasonable under the circumstances, it will remove or cause the
removal of any references to Mobil in connection with the sale or
distribution of Mobil Motor Fuels including, but not limited to, brand
names, color schemes, logos, slogans, signs, advertising, trademarks,
equipment and promotional material, from any location determined by
Mobil to be in material violation of this Agreement and return such
identification signs to a location designated by Mobil at Petro's
cost.
3.4 Product Protection/Quality Assurance (Substitution, Adulteration and
--------------------------------------------------------------------
Misbranding). Petro shall not substitute or mix, and shall use
------------
commercially reasonable effort to ensure that no Operator selling
Mobil Motor Fuels shall substitute or mix, any other petroleum
products for or with Mobil Motor Fuels for sale under Mobil's
trademarks, at any locations owned, operated, controlled or supplied
by Petro under this Agreement. Only Mobil Motor Fuels purchased from
Mobil or otherwise approved in writing by Mobil may be distributed or
handled by Petro through equipment, containers or conveyances bearing
Mobil's trademarks. Petro shall, and Mobil at its option may, inspect
and take samples from storage tanks, drums, pumps and tanks of
delivery vehicles owned or leased by Petro, so as to prevent
contamination of Mobil Motor Fuels covered by this Agreement. Petro
shall be subject to immediate termination in the event of product
substitution, misbranding and/or adulteration if Petro knowingly
allows its Petro Operators or Branded Sites to substitute, misbrand
and/or adulterate product. All resale of Mobil Motor Fuels by Petro
and Petro Operators shall be consistent with Mobil product quality
requirements. Upon request, Petro agrees to provide Mobil with the
results of any tests of Mobil Motor Fuels conducted by or for Petro,
and further agrees to permit Mobil to conduct any additional tests as
Mobil may reasonably require. Petro shall furnish Mobil with
reasonable access to Petro Branded Sites and use commercially
reasonable efforts to arrange for Petro Operators to furnish Mobil
with reasonable access to Operator Branded Sites so that Mobil may
conduct any sampling and testing it may require.
3.5 Change of Trademarks and Color.
------------------------------
21
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Mobil may at any time change any trademark, service mark, brand name
or logo, or any design, color or color scheme, used in connection with
the sale or distribution of Mobil Motor Fuels. If Mobil's change of
trademarks and color results in necessary and additional costs to
Petro, Mobil shall be responsible for such costs.
3.6 Termination of Right to Use Trademarks. On the effective date of any
--------------------------------------
termination or nonrenewal of this Agreement, however arising, Petro
shall, or shall arrange for Petro Operators to, immediately
discontinue all references to Mobil in connection with the sale or
distribution of Mobil Motor Fuels including, but not limited to,
Mobil's color schemes, trademarks, brand names, logos, slogans, signs,
advertising and promotional materials. Discontinue all references
means to either remove or cover up the references to Mobil. At such
time or in the event of any withdrawal of Mobil's approval of a
Branded Site, Petro shall remove or cover up all references to Mobil
in connection with the sale or distribution of Mobil Motor Fuels
including, but not limited to, color schemes, trademarks, brand names,
logos, slogans, signs, advertising and promotional materials and
promptly return to Mobil all signs, equipment, advertising and
promotional materials which Mobil may have loaned or otherwise
furnished to Petro for that purpose including, without limitation, any
signs or equipment repurchased by Mobil under Article 10. Such items
shall be returned to Mobil in the condition they were received by
Petro, subject only to ordinary wear and tear. In the event Petro or
any Petro Operator fails to return said signs, equipment, advertising
or promotional materials, Petro hereby irrevocably grants Mobil the
right to enter upon Petro Branded Sites and remove said signs,
advertising materials and equipment or, if it is not practical to
remove such signs, advertising materials or equipment, obliterate
them. In no event does Mobil have any obligation to restore any
Branded Site to its condition as it existed prior to installation of
any signs, advertising materials or equipment except to the extent
that Mobil shall repair any damage caused by its exercise of the
rights under this Section 3.6. Petro shall, in its agreements with
Petro Operators who sell Mobil brand products, include a similar
provision granting Mobil the right to enter each Operator Branded Site
to remove such signs, promotional materials, advertising and
equipment. Mobil shall bear the cost of restoration (as defined in
this Section 3.6) of any Branded Site and, except as expressly
provided below in this Section 3.6, in respect to the Proprietary
Equipment (as defined in Section 10.2), Petro shall bear the cost of
removal of any reference to Mobil in connection with the sale or
distribution of Mobil Motor Fuels including, but not limited to, any
color schemes, trademarks, brand names, logos, slogans, signs,
promotional materials, advertising and equipment, including, without
limitation, transportation costs. Mobil may draft Petro's account or
deduct such costs from any monies Mobil may owe Petro at the time of
removal. If Petro disputes the amount of the draft, the parties will,
in good faith, attempt to resolve the dispute. With respect to the
Proprietary Equipment, the costs and expenses relating to the removal
of
22
<PAGE>
the Proprietary Equipment and the return of such equipment to Mobil
shall be borne by Petro except as follows:
(a) Mobil shall only pay restoration costs, as that term is defined
in this Agreement, if any of the following occurs:
(i) Petro terminates this Agreement, or a Petro Operator
exercises its right to terminate its franchise agreement
with Petro pursuant to its terms, as a result of Mobil's
material failure to fulfill its obligations under this
Agreement. In no event does this Section 3.6(a) apply to
occasional or localized minor supply disruptions;
(ii) Mobil terminates or fails to renew this Agreement as a
result of Mobil's withdrawal from marketing either Mobil
Diesel or Mobil Gasoline from the geographic markets;
(iii) Mobil does not renew this Agreement with Petro because the
renewal thereof is likely to be uneconomical;
(iv) Petro terminates this Agreement as a result of Mobil's
repudiation or material default of this Agreement.
(b) Mobil and Petro shall bear such costs equally (except restoration
costs which will be borne solely by Mobil) upon their mutual
agreement to terminate this Agreement.
(c) For purposes of this Section 3.6, restoration costs is limited to
the cost of, if necessary, replacing Panaflex, repairing and
painting poles, canopies, or dispensers from which Mobil signs
were removed.
ARTICLE 4
MOBIL RESPONSIBILITIES
----------------------
4.1 Mobil Responsibilities. Mobil will support Petro with such assistance
----------------------
as Mobil deems appropriate, in its sole discretion, in the competitive
distribution of Mobil Motor Fuels.
ARTICLE 5
STANDARDS OF OPERATION
----------------------
23
<PAGE>
5.1 Business Operations. Petro agrees to exercise sound business practices
-------------------
by using a total quality management approach in managing the franchise
and to use good-faith and commercially reasonable efforts to maximize
the sale of Mobil Motor Fuels within the Petro System under the terms
of this Agreement. Without limiting any other obligation of Petro
under this Agreement, Petro also shall employ adequate personnel to
assist Petro Operators at Branded Sites, and monitor and enforce the
standards set forth in this Agreement including, without limitation,
the standards under Articles 3, 5, 6, 7 and 8 and the standards set
forth in Exhibit F. Specifically, in order to maintain the highest
standards of interstate truckstop operations, Petro shall, and shall
use commercially reasonable efforts to ensure its Petro Operators:
(a) maintain adequate manpower levels considering both the volume and
the nature of the business activity during operating hours;
(b) provide training programs for its pump-island personnel to ensure
high standards of retailing and services at all Branded Sites;
(c) employ sound retailing practices, including without limitation
diligently and efficiently merchandising and promoting Mobil
Motor Fuels;
(d) maintain inventories of Mobil Motor Fuels reasonably sufficient
to serve customers during all business hours at Branded Sites;
(e) use sufficient lighting and approved illuminated signs to provide
full visibility of the pump islands at Branded Sites, including
without limitation enclosed areas, at all times while open for
operation;
(f) attend, at Petro's or Petro's Operators' cost, onsite training on
Mobil's credit card program and such other training as agreed to
by Petro and Mobil; and
(g) comply with the Retail Image Standards as defined in Exhibit F
and take any action reasonably necessary to meet or exceed, or
enforce, the standards set forth in this Agreement including,
without limitation, Articles 3, 5, 6, 7 and 8 and the standards
set forth in Exhibit F.
5.2 Hours of Operation. Petro acknowledges the importance of operating
------------------
Branded Sites at hours which are competitive and meet the needs of the
motoring public.
ARTICLE 6
STANDARDS OF APPEARANCE
-----------------------
24
<PAGE>
6.1 Representations. Petro acknowledges the substantial investment Mobil
---------------
has made in the development of a high quality image for the Mobil
trademarks, trade names and service marks. Petro shall preserve, and
shall exert commercially reasonable efforts to ensure that Petro
Operators at Operator Branded Sites preserve, the value of Mobil's
trademark by maintaining the appearance of Branded Sites used to sell
Mobil Motor Fuels in accordance with Mobil's high standards, the
minimum requirements for which are set forth in this Article 6 and in
Exhibit F. In addition, Petro shall ensure that Petro personnel
periodically conduct an onsite field review of each Branded Site to
ensure its continuing compliance with the minimum requirements in this
Article 6 and in Exhibit F.
6.2 Minimum Appearance Standards.
----------------------------
(a) Petro agrees to adopt or continue to foster, as of the date of
this Agreement, the standards set forth in this Agreement
including, without limitation, the Retail Image Standards set
forth in Exhibit F for all Branded Sites. This provision is
reasonable and of material significance to this Agreement. Petro
shall at all times operate, or use commercially reasonable
efforts to cause to be operated, all Branded Sites in compliance
with the standards set forth in the Retail Image Standards
Brochure.
(b) In the event that Petro adds any additional Branded Site to this
Agreement by obtaining Mobil's approval and written consent under
Section 3.3, Petro agrees that such site shall be brought into
strict compliance with the standards set forth in this Agreement
(including, without limitation, the Retail Image Standards set
forth in Exhibit F) no later than ninety (90) days (as such
period may be reasonably extended by Petro due to any cause or
event beyond Petro's reasonable control) after Mobil's grant of
approval to brand the Truckstop.
(c) If, at any time during the Term of this Agreement, Petro fails to
bring any Branded Site into strict compliance as set forth in
this Agreement including, without limitation the Retail Image
Standards set forth in Exhibit F, or if at any time after forty-
five (45) days' written notice (or such shorter period as is
reasonable under the circumstances which shall in no event be
less than ten (10) calendar days) Petro fails to operate or use
commercially reasonable efforts to cause to be operated any
Branded Site in strict compliance with the standards set forth in
Exhibit F, then Petro shall, at Mobil's option, lose the right to
use or display Mobil's trademarks and brand names at such
station.
(d) Without limiting any other obligation of Petro under this
Agreement (including, without limitation, compliance with the
standards set forth in
25
<PAGE>
Exhibit F), Petro shall meet or exceed at all Petro Branded
Sites, and shall use commercially reasonable efforts to ensure
that Petro Operators meet or exceed at all Operator Branded
Sites, the following minimum appearance standards with respect to
Mobil branded fueling points:
(i) Keep clean at all times the exterior and underside of all
pump-island canopies, except for normal diesel fuel soot.
(ii) Power wash the exterior and underside of all pump-island
canopies at least once each calendar year.
(iii) At each pump island, promptly replace all burned-out
lights (including, but not limited to, all internally lit
Mobil signage), keep clear all light lenses and promptly
repair or replace any damaged or broken light lenses.
(iv) Ensure no signage advertising a competitive petroleum
product is used at pump islands except as previously
approved by Mobil in writing. Signage must be
professionally done.
(v) Use only such diesel pump decals and information signs as
may be supplied by Mobil at Mobil's cost, which decals and
signs will comply with applicable rules and regulations,
ensure placement of such signs in accordance with Mobil's
reasonable written directions and replace such signs if
they become worn or faded or are damaged or removed at
Mobil's cost. Petro may place one additional decal on the
dispensers which advertises Petro Power Plus Additive.
(vi) Clean pump islands daily and empty island trash containers
on a regular basis to ensure no overflow.
(vii) Keep clean (including, without limitation, clean at least
daily) all fuel dispensers and maintain such dispensers in
good condition and proper working order.
(viii) At each pump island, maintain an adequate supply of
windshield-cleaning equipment and towel and trash
containers.
(ix) Ensure that all employees in contact with motor fuel
customers at the fueling area wear the standard Petro or
Mobil uniform.
26
<PAGE>
(x) Keep clean all service bays, payment areas and buildings.
(xi) Maintain clean and well-stocked restrooms.
(xii) Maintain all asphalt and concrete in fueling area in good
repair and reasonably free of potholes.
ARTICLE 7
CUSTOMER SERVICE
-----------------
7.1 To ensure that a timely and pleasant fuel buying experience is being
maintained, Petro shall utilize a third-party anonymous customer-
service measurement program reasonably acceptable to Mobil which will
conduct surveys, the cost of which will not exceed $100 per year per
site unless the parties mutually agree otherwise, as follows:
(a) the survey must measure customer service and appearance items as
agreed to by Petro and Mobil;
(b) the surveys must be conducted a minimum of two times per year for
each Branded Site (including one visit during non-daylight
hours); and
(c) Petro shall provide Mobil semi-annually with a report summarizing
the survey results with underperforming locations identified.
(d) Petro will provide necessary training to ensure application of a
total quality management approach and to provide continual
improvement of survey results.
7.2 Customer Complaints. Petro shall manage, and shall exert commercially
-------------------
reasonable efforts to cause its Petro Operators at Operator Branded
Sites to manage, all Branded Sites so as to minimize customer
complaints. Petro shall promptly investigate any customer complaints
relating to Branded Sites and shall make, or ensure others make, such
adjustments as are reasonable and appropriate. If corrective steps are
not taken by Petro or any Petro Operator within a reasonable time,
Mobil shall have the right after giving ten (10) days' advance written
notice to: (a) withdraw its approval of a Branded Site, and (b)
require all Mobil trademark signs and equipment be removed from or
covered up at said Branded Sites as provided in Articles 3 and 10 of
this Agreement. Customer complaints arising out of credit card
transactions shall be subject to the provisions of Mobil's Credit Card
Instructions (Form CO-66), as more fully described in Article 11
herein.
27
<PAGE>
ARTICLE 8
MAINTENANCE OBLIGATIONS
-----------------------
8.1 Maintenance Obligations - Petro. In addition to the minimum standards
-------------------------------
set forth in the Articles 5, 6, 7 and Exhibit F, Petro shall, and
shall use its commercially reasonable efforts to require its Petro
Operators to:
(a) maintain the Branded Sites (including, without limitation,
adjacent sidewalks and driveways, all landscaped areas and
equipment) in a neat, clean and safe condition and promptly make
all necessary repairs or replacements; and
(b) operate and maintain all emission control and leak detection
equipment substantially in accordance with the instructions of
the manufacturer, replace as necessary, and substantially comply
with all applicable laws with respect to said equipment.
8.2 Underground Storage Tanks. Petro shall, and shall use its commercially
-------------------------
reasonable efforts to require Petro Operators to, in good faith,
maintain all underground storage tanks, piping and related equipment
used for the storage, handling or dispensing of Mobil Motor Fuels, in
good, safe and operating condition; and put any tanks, piping or
equipment not so maintained safely out of service, all in accordance
with applicable law.
8.3 Proprietary Equipment. Petro shall maintain in good, clean and
---------------------
operating condition all Proprietary Equipment (as defined in Section
10.2) including, but not limited to, promptly replacing all bulbs and
repair or replace as reasonably necessary any damaged Proprietary
Equipment regardless of the cause of such damage, except for damage
caused by Mobil or Mobil's agents.
ARTICLE 9
ENVIRONMENTAL PROTECTION, HEALTH AND SAFETY
-------------------------------------------
9.1 Labeling. Petro shall comply, and shall take commercially reasonable
--------
steps to ensure Petro Operators comply, with all health and safety
labeling and posting requirements of Mobil and of any governmental
agency or manufacturer.
28
<PAGE>
9.2 Compliance with Laws. Petro shall, and shall take commercially
--------------------
reasonable steps to ensure Petro Operators, comply in all material
respects with all applicable Federal, state and local laws with
respect to health and safety, and water, soil and air environmental
protection as well as all laws governing or pertaining to Petro's or
Petro Operators' receipt, storage, handling, transportation, sale and
distribution of hazardous materials and waste and Mobil Motor Fuels
covered under this Agreement.
9.3 Product Quality Control. Petro shall exercise the degree of care and
-----------------------
diligence that is commercially reasonable and necessary in the
handling, storage and sale of Mobil Motor Fuels covered by this
Agreement and shall protect the quality of Mobil Motor Fuels,
including without limitation protecting it from contamination by water
or any other substance.
9.4 Environmental Contamination. If a Mobil Motor Fuel spill, leak or
---------------------------
release occurs anywhere in connection with Petro's performance of this
Agreement, or Petro otherwise determines there is environmental
contamination at a Branded Site, Petro shall, if and to the extent
required by the governmental agency having jurisdiction, promptly
notify the appropriate governmental authorities and shall take timely
action to clean up the spill, leak or release or other contamination
and prevent further damage. In the event that Mobil incurs any
reasonable costs due to the environmental condition of a Branded Site,
for compliance or lack of compliance with environmental laws, or
otherwise for the operation of Petro's business, such costs shall be
paid by Petro to Mobil upon demand. This remedy is in addition to the
remedies and indemnities provided elsewhere in this Agreement.
9.5 Motor Fuel Content and Quality Requirements
-------------------------------------------
(a) Mobil shall represent, and shall include in its bills of lading,
invoices and/or other delivery documentation certifications
sufficient to demonstrate, that Mobil Motor Fuels sold under this
Agreement comply with all applicable federal, state and local
requirements including, without limitation, requirements for
cetane or octane rating, sulfur content, aromatic content, oxygen
content, reid vapor pressure, and dye content. Petro shall obtain
and retain such documentation as required by applicable law.
(b) Petro shall exercise, and shall use commercially reasonable
efforts to require Petro Operators reselling Mobil Motor Fuels to
exercise, the degree of care and diligence commercially
reasonable and necessary to ensure that Petro's receipt,
handling, storage, transportation, sale or use of Mobil Motor
Fuels received under this Agreement will be in continued
compliance with all applicable legal requirements for Mobil Motor
Fuels including, without
29
<PAGE>
limitation, any federal, state and local
requirements for cetane or octane rating, sulfur content,
aromatic content, oxygen content, reid vapor pressure, and dye
content.
(c) Petro hereby grants to Mobil and its contractors and agents
permission to obtain Mobil Motor Fuels samples at any and all
Branded Sites as provided below. Petro shall arrange for Petro
Operators to permit Mobil and/or its contractors and agents, upon
reasonable prior notice, to enter upon the premises of Petro
Operators from time to time to take Mobil Motor Fuel samples for
analysis to ensure compliance with all federal, state and local
diesel requirements. Petro shall implement a similar or
comparable oversight program as soon as possible after the
execution of this Agreement to ensure that Mobil Motor Fuels
supplied by Mobil: 1) are not mixed with motor fuel that does not
comply with all federal, state, and local motor fuel content
requirements, or 2) is not otherwise contaminated. Petro shall
retain for three (3) years the results of all tests conducted on
Mobil Motor Fuel samples in conjunction with Petro's oversight
program.
(d) If Petro or its employees, agents, contractors, carriers or
dealers fail in any material respect at any time to comply with
the obligations set forth in this Section 9.5 or with an
applicable federal, state or local motor fuel laws, regulation or
requirements, such failure shall constitute a breach of this
Agreement by Petro, and Petro shall be subject to all the
remedies and sanctions for breach set forth in this Agreement or
at law including, without limitation,the debranding of any
Branded Site and temporary or permanent cessation of sales of
Mobil Motor Fuel to Petro or to any Branded Site.
ARTICLE 10
PROPRIETARY SIGNS
-----------------
10.1 I. D. Sign and Imprinter Rental. Mobil hereby sells or leases to
-------------------------------
Petro, and Petro hereby agrees to pay Mobil the cost or rental
attributable to each sign, imprinter, POS terminal and other equipment
listed in Exhibit E. The rental, if any, listed in Exhibit E shall be
payable when due and shall be no higher than the rental Mobil charges
its other distributors for POS terminals. Should Petro's right to use
any such sign cease to exist in accordance with the terms of this
Agreement, any annual rental paid in advance to Mobil on such sign
shall be proportionately refunded to Petro based on the unused time
remaining for the applicable period.
10.2 Proprietary Equipment. Mobil has developed certain proprietary
---------------------
equipment of unique design for use in the retail sale of gasoline,
including Mobil Blue Island Fascia
30
<PAGE>
Fixtures and Mobil Hi-Hose Fascia Lights, Mobil Canopy Legends, and
Mobil Price signs (hereinafter called the "Proprietary Equipment").
During the Term of this Agreement, Mobil hereby agrees to sell, either
itself or through a designated vendor, to Petro, on the same terms as
other distributors, such Proprietary Equipment and signs (except for
Mobil I. D. signs) for use at Petro Branded Sites approved by Mobil to
sell Mobil Gasoline or its Mobil branded Operator Sites. Mobil does
not warrant or guarantee any equipment or signs. Petro accepts all
Proprietary Equipment AS IS. WITH RESPECT TO PROPRIETARY EQUIPMENT
SOLD TO PETRO THROUGH A DESIGNATED VENDOR, MOBIL SPECIFICALLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. With
respect to Proprietary Equipment sold to Petro by Mobil, Mobil agrees
to transfer to Petro any and all manufacturer's warranties. Petro
agrees to sell back said Proprietary Equipment to Mobil in accordance
with the terms set forth herein. Mobil shall have the right upon
reasonable advance notice from time to time to take an inventory of
Petro's Proprietary Equipment and signs, and Petro agrees to cooperate
fully with Mobil with regard to any such inventory.
10.3 Petro Proprietary Equipment Purchase. Petro hereby agrees to provide
------------------------------------
no less than forty-five (45) days' advance written notice to Mobil and
to offer any such Proprietary Equipment to Mobil for its repurchase
upon any of the following contingencies: (1) upon termination or non-
renewal of this Agreement; or (2) before otherwise permitting or
authorizing others to use such Proprietary Equipment except for those
authorized pursuant to this Agreement; or (3) before Petro sells
products other than Mobil branded products through such Proprietary
Equipment whether or not Mobil exercises its right to debrand any
Branded Site. Mobil will have forty-five (45) days from the date of
offer to accept. All prices paid by Petro for said Proprietary
Equipment must be substantiated by Petro by copy of the original
invoice for said Equipment. The price that Mobil shall pay to
repurchase said Equipment shall be as follows:
(a) For all Mobil Blue Island Fascia Fixtures, and Mobil Hi-Hose
Fascia Lights, the purchase price shall be the then current
market value for such Mobil Blue Island Fascia Fixtures and Mobil
Hi-Hose Fascia Lights, but not more than the original price paid
by Petro less 10% per year depreciation to a minimum of $50.00
per complete fixture.
(b) For the Mobil Canopy Legends, the purchase price shall be the
then current in place value, but not more than the original price
of the legend, less 20% per year depreciation to a minimum of
$10.00 per Mobil Canopy Legend.
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<PAGE>
(c) For the Mobil Price Signs, the purchase price to Mobil shall be
the lower of the fair market value of the signs(s) at the time of
the offer or the original purchase price paid by Petro less 20%
per year depreciation to a minimum of 10% of the original
purchase price.
(d) For all other future proprietary equipment, Petro shall be
advised in writing of the applicable depreciation which shall
then apply.
10.4 Return of Proprietary Signs and Equipment. Upon the termination or
-----------------------------------------
nonrenewal of this Agreement, or upon withdrawal of approval by Mobil
of a Branded Petro Site, Petro shall return any signs, POS terminals
and credit card imprinters rented from Mobil and listed in Exhibit E
in accordance with the terms of this Agreement. In the case where
Petro has purchased the sign(s) and/or equipment from Mobil, Petro
shall return said signs to Mobil upon receipt of monies, if any, owed
by Mobil to Petro for said signs and equipment in accordance with the
terms of the depreciation schedule set forth in Section 10.3 above. In
the case of Mobil I.D. signs, Petro shall return said signs to Mobil
upon termination, nonrenewal or withdrawal of approval.
10.5 Installation of Signage and Proprietary Equipment.
--------------------------------------------------
For Diesel branding, Mobil shall diligently undertake installation of
the Mobil Diesel Hi Rise Sign, Canopy Legend and decals in a safe and
workmanlike manner and Mobil shall warrant such installation to the
extent customary in the industry. Petro shall install in a safe and
workmanlike manner all exit signs concurrent with annual interstate
renewal. For Gasoline branding, Petro shall diligently undertake
installation of all signs and other identification customarily
required by Mobil for gasoline branding in a safe and workmanlike
manner and in accordance with Mobil's Retail Image Standards.
10.6 Licenses and Permits. Petro shall obtain and keep in good standing
--------------------
all necessary licenses and permits with respect to all equipment,
including without limitation motor vehicle equipment, and signs used
by Petro in the sale and distribution of Mobil Motor Fuels covered by
this Agreement.
ARTICLE 11
RETAIL CREDIT AND DEBIT PROGRAM
-------------------------------
11.1 Retail Credit and Debit Program. For so long as Mobil offers to Petro
-------------------------------
and Petro elects to participate in Mobil's Retail Credit and/or Debit
Program ("Program"), Petro shall comply with the Program, as the same
may be amended system wide by Mobil from time to time, as set forth in
Mobil's current Credit Card Instructions, Form CO-
32
<PAGE>
66 ("Instructions"). Petro shall cooperate fully in preventing sales
to persons not authorized to use the credit or debit card presented
for payment. Petro acknowledges receipt of a copy of the Instructions,
and that Petro has read them and is familiar with them. Petro shall
keep the Instructions at Petro's company operated locations for
reference by Petro and its employees. Petro shall be responsible for
the acts of Petro and its employees with regard to the Instructions.
Mobil reserves the right, upon 45 days' advance notice or such shorter
notice as is reasonable under the circumstances, to terminate or
otherwise limit Petro's participation in the Program for Petro's
violation of the Instructions.
11.2 Program Participation by Petro's Operators. Upon written approval by
------------------------------------------
Mobil, which approval shall not be unreasonably withheld, conditioned
or delayed, and Mobil Oil Credit Corporation, Petro shall authorize
Petro Operators at Operator Branded Sites to participate in the
Program provided that each such operator: (a) agrees to the terms of
this Article and of the Instructions; (b) agrees to read and become
familiar with the Instructions and to maintain them at such operator's
site for reference by such operator and its employees; and (c)
cooperates fully in preventing sales to persons not authorized to use
the credit or debit card presented for payment. Petro will use
commercially reasonable efforts to ensure that each Petro Operator
participating in the Program complies fully with the terms of this
Article and of the Instructions, and Petro shall be responsible for
the acts of Petro Operators and their employees in that regard. Mobil
reserves the right, upon notice, to terminate or otherwise limit the
participation by Petro's Operators in the Program.
11.3 Reimbursement for Credit and/or Debit Transactions. For all sales
--------------------------------------------------
made by Petro or Petro Operators at Branded Sites in accordance with
the Program, Mobil shall, in its sole discretion, either pay Petro or
credit to Petro's account the face amount of each credit or debit
sales ticket delivered or electronically transmitted to Mobil, less
such charges as Mobil may establish systemwide for participation in
the Program, provided any required manual delivery of the credit or
debit sales ticket is made within the time specified by Mobil, but not
later than fifteen (15) days after such sale. Unless otherwise agreed
in writing by Mobil, Petro and Petro Operators may use the Program
only in accordance with the Instructions.
11.4 Point of Sale Program Participation. Petro shall participate, and
-----------------------------------
shall require, as a condition of their agreement to sell Mobil Motor
Fuels, Petro Operators who agree to sell and distribute Mobil Diesel
or Mobil Gasoline pursuant to a supply agreement with Petro to
participate in Mobil's sponsored point of sale ("POS") programs. Petro
shall execute Mobil's POS Maintenance and System Access Agreement for
Electronic Point of Sale Terminals, a copy of which is attached hereto
as Exhibit G.
33
<PAGE>
11.5 Remedies. If Petro or Petro Operators fail in any material respects
--------
to comply with the Instructions, POS Maintenance and System Access
Agreement for Electronic Point of Sale Terminals, including without
limitation the requirement that Petro and Petro Operators take
reasonable precautions to prevent sales to unauthorized persons, Mobil
may, in addition to any other remedy which may be available to it,
take any one or more of the following actions it deems necessary in
its sole discretion: (a) charge back to Petro's account the amount of
any credit or debit transaction and any costs incurred by Mobil; (b)
upon reasonable advance notice, impose special terms and procedures on
Petro's or a Petro Operator's participation in the Program; or (c)
upon reasonable advance notice, exclude Petro (if Petro's failure) or
any Petro Operator (if Petro Operator's failure) from participation in
the Program. Failure by Petro or Petro Operators to comply in any
material respect with the Instructions, Point of Sale Participation
Agreement or Lease Agreement for Electronic Credit Card Point of Sale
Terminal, or failure by Petro or Petro Operators to pay promptly any
charge to Petro's account resulting from such failure, shall
constitute grounds for Mobil to disapprove or withdraw its approval of
any Branded Site. Repeated failures by Petro may constitute a default
of this Agreement. Petro shall, upon reasonable advance notice,
immediately return to Mobil any manual credit card imprinter and/or
electronic credit card point of sale terminal leased to Petro by
Mobil, whether such terminal is at a Petro Branded Site or at a
Operator Branded Site.
ARTICLE 12
INDEMNIFICATION
---------------
12.1 (a) BY PETRO. Petro shall indemnify, defend, save and hold harmless
Mobil and Mobil's Representatives (other than Petro employees
acting on behalf of Mobil and as defined below), from and against
any and all claims, liabilities, damages, lawsuits, deficiencies,
fines, penalties, costs and expenses, including reasonable
attorney's fees (herein, the "Damages"), incurred by Mobil or its
Representatives (other than Petro employees acting on behalf of
Mobil) principally as a result of: (i) any inaccuracy of any
representation or warranty made by Petro in this Agreement and/or
the failure of Petro to comply with any agreement or covenant of
this Agreement; (ii) the acts or omissions of Petro or any of its
Representatives; (iii) the acts or omissions of Petro Operators
in violation of Article 9 of this Agreement; (iv) Petro's
receipt, loading, transportation, unloading, storage, handling,
sale, use or other disposition of Mobil Motor Fuels covered by
this Agreement; (v) any transactions entered into by, or events
of, Petro or any of its Representatives or agents. For the
purposes of this Section 12(a), the term "Mobil" shall include
any subsidiary or affiliate of Mobil as provided in Sections
2.3(a) and 2.6.
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<PAGE>
(b) BY MOBIL. Mobil shall indemnify, defend, and save and hold
harmless Petro and Petro's Representatives (other than Mobil
employees acting on behalf of Petro) from and against any and all
Damages incurred by Petro or its Representatives (other than
Mobil employees acting on behalf of Petro) principally as a
result of: (i) any inaccuracy of any representation or warranty
made by Mobil in this Agreement and/or the failure of Mobil to
comply with any agreement or covenant of this Agreement; or (ii)
any transactions entered into by, or events, acts or omissions
of, Mobil or its Representatives.
(c) "Representatives" of a person or entity shall mean all officers,
directors, shareholders, employees, partners, members, managers,
agents, associates, accountants and attorneys of that person or
entity or any subsidiary, affiliate, partner or member of such
person or entity.
12.2 Claims. Mobil shall have no liability to Petro for any defect in
------
quality, or shortage in quantity, of any products sources from Exhibit
D Terminals covered by this Agreement unless Petro gives Mobil notice
of Petro's claims within (a) two business days after receipt for
shortages in quantity of products; or (b) four business days after
receipt (or discovery in the case of any latent defect) for quality
deficiencies, and further provides Mobil with a reasonable opportunity
to inspect the products and take test samples. In no event shall
Mobil's liability for claims under this Section 12.2 exceed the
purchase price of the Mobil Motor Fuel in question together with any
reasonable out-of-pocket expenses incurred by Petro resulting from
damage or injury that is shown to have resulted from diesel fuel or
gasoline supplied by Mobil from any of the Exhibit D Terminals. With
respect to product supplied by Mobil from an alternate source, the
parties will jointly coordinate in pursuing and resolving any claim
against the supplier for defect in quality, or shortage in quantity.
Notwithstanding notice by either party, any claim by either party
shall be waived and barred unless asserted by the commencement of an
action in a court of competent jurisdiction within twelve (12) months
after the event, action, or inaction to which such claim relates.
12.3 Limitation of Liability. In no event shall Mobil or Petro be liable
-----------------------
under this Agreement for prospective profits or special, indirect, or
consequential damages.
12.4 General Insurance Requirements. Petro shall obtain, renew and keep
------------------------------
current during the Term of this Agreement all insurance required by
applicable law and, in addition, insurance reasonably satisfactory to
Mobil including, but not limited to, general liability and automobile
liability insurance with limits of not less than one million dollars
($1,000,000) per occurrence. In the case where Petro uses its owned or
leased transports in the operation of its business, the general
liability and automobile liability insurance shall include coverage
against pollution incidents occurring during transit
35
<PAGE>
including, without limitation, those which result from collision or
overturn, fire or explosion. In the case where Petro does not have its
own transports but uses a common carrier, Petro represents that all
transport common carriers used by Petro to carry Mobil Motor Fuels
shall at all times maintain insurance at the levels required by the
Hazardous Materials Transportation Act.
12.5 Underground Storage Tank Insurance. Petro shall also be required to
----------------------------------
obtain pollution liability insurance for any underground storage tanks
owned, leased or used by Petro with limits of not less than one
million dollars ($1,000,000) per occurrence, two million dollars
($2,000,000) aggregate. Pollution insurance coverage described in this
Section 12.5 is not required until such time as the Federal
Underground Storage Tanks Financial Responsibility requirements become
applicable. Petro's obligation to obtain pollution insurance coverage
for underground storage tanks may be met by participation in an EPA
approved state cleanup fund or similar program covering contamination
from underground storage tanks or by satisfying any of the other
financial assurance test requirements of the Federal Financial
Responsibility Regulations. Petro shall provide to Mobil, upon
request, evidence reasonably satisfactory to Mobil of such
participation in a clean up fund or compliance with the Federal
financial assurance tests applicable to clean up of spills and leaks.
If at any time Petro ceases participating in a state cleanup fund or
similar program or ceases meeting the Federal financial assurance
tests, Petro shall be required to provide Mobil with evidence of
pollution insurance in the amounts provided herein. The term
"Underground Storage Tank" shall include, but not be limited to, all
piping, lines and accessories connected to or made a part of a
petroleum underground storage tank. Petro shall pay all premiums and
assessments charged for the above-described insurance and any other
insurance Petro may carry. In the event that any such policy is
terminated, canceled or materially changed, Petro shall promptly
procure a new or substitute policy containing substantially the same
or additional coverage as was previously provided to be effective with
the expiration of the canceled or terminated policy, or the material
change.
ARTICLE 13
FORCE MAJEURE
-------------
13.1 Contingencies. Neither party shall be liable for cost, expense, loss,
-------------
damage or demurrage due to any delay or failure in performance of its
obligations to purchase or sell Mobil Motor Fuels under this Agreement
for any reason or cause which such party determines is beyond its
reasonable control, when acting in good-faith and in the ordinary
course of business, which reason or cause shall include, but not be
limited to, the following:
36
<PAGE>
(a) either party's compliance with any order, rule, regulation,
direction or request of any governmental authority or person
purporting to act therefor; or
(b) when the supply of products or any facility or production,
storage, transportation, distribution or delivery contemplated by
either party is interrupted, unavailable or inadequate.
Neither party shall be required to remove or remedy any such reason or
cause, or remedy any contingency of the nature described herein, if to
do so would involve substantial expense or a departure from such
party's normal business practice.
13.2 Allocation. In the case of any contingency described in Section 13.1,
----------
Mobil may allocate to and between Petro and Mobil's other branded
motor fuels distributors such quantities of Mobil Motor Fuels from
Exhibit D Terminals as Mobil determines in the exercise of its
ordinary business judgment it has available for distribution to that
class of trade from any given terminal or point of supply, provided
that Mobil's plan of allocation shall not unreasonably discriminate
between Petro and Mobil's other distributors. In all instances in this
Article 13 wherein a determination of Mobil is referred to, such
determination shall be made in Mobil's reasonable discretion while
acting in the ordinary course of business.
13.3 Annual Price Adjustment. To the extent that any contingency described
-----------------------
in Section 13.1 results in Mobil's inability to make adequate Mobil
Motor Fuels available to Petro in any Calendar Year during the Term to
meet Mobil's supply obligations under this Agreement, the following
applies:
(a) if such inability to supply Mobil Motor Fuels relates to product
supplied from sources other than Exhibit D Terminals, Petro will
not be excused from its obligation as provided in Section
2.4(g)(i) to pay the Annual Price Adjustment.
(b) if such inability to supply relates to all or any part of the
Mobil Motor Fuel to be supplied from the Exhibit D Terminals, and
Mobil does not substitute another terminal for any Exhibit D
Terminal, Mobil will be deemed to have reduced or deleted minimum
monthly or annual quantities for the affected terminal under
Exhibit D and the provisions of Section 2.1(b) will apply with
respect to any adjustment of the Annual Price Adjustment for that
Calendar Year.
13.4 Supply Disruptions. To address potential short-term supply
------------------
disruptions, Mobil and Petro shall cooperate to arrange back-up
supplies for Mobil Motor Fuels which is to be sourced from the Exhibit
D Terminals.
37
<PAGE>
ARTICLE 14
TERMINATION AND NONRENEWAL
--------------------------
14.1 Termination or Nonrenewal of Agreement and Franchise Relationship.
-----------------------------------------------------------------
Mobil may terminate or nonrenew this Agreement, the franchise and the
franchise relationship between the parties pursuant to the applicable
provisions of the PMPA or for material breach of any provision of this
Agreement in the event the PMPA is no longer applicable to this
Agreement. Attached is a copy of the PMPA Summary prepared by the
Department of Energy, which is to be furnished, subject to any
amendments or modifications, with any notice of termination or
nonrenewal by Mobil. Mobil's termination or nonrenewal of this
Agreement in no way affects Petro's rights and obligations with
respect to its franchisees under the "Petro Stopping Centers"
franchise. This PMPA franchise relationship is separate and apart from
the "Petro Stopping Centers" franchise.
14.2 Right of Termination Due to Governmental Action. If any federal,
-----------------------------------------------
state or local governmental action results in the adoption of orders,
rulings, ordinances, regulations, laws or other requirements that (a)
significantly alter the reasonable expectations of the parties at the
time of entering into this Agreement; or (b) modify in any way the
present relationship of Mobil Oil Corporation's exploration,
production, supply, transportation, refining or marketing functions to
the structure of Mobil Oil Corporation, then the affected party may
terminate this Agreement upon not less than one hundred and eighty
(180) days' prior written notice to the other party.
14.3 Accrued Rights. Any termination or nonrenewal shall be without
--------------
prejudice to Mobil's or Petro's accrued rights.
14.4 Remedies of the Parties. Subject to Section 13.1, in the event of any
-----------------------
default by Petro or any failure or refusal by Petro to perform any of
the agreements, covenants, conditions or provisions of this Agreement,
Mobil may, in addition to its right to terminate or nonrenew this
Agreement, the franchise and the franchise relationship between the
parties and upon advance notice, suspend all deliveries of Mobil Motor
Fuels to Petro until such default has been corrected or remedied.
Subject to Article 13 of this Agreement, (i) in the event of any
default by Mobil or any failure or refusal by Mobil to perform any of
the agreements, covenants, conditions or provisions of this Agreement,
and (ii) such default, failure or refusal by Mobil continues for 90
days after notice without cure, and (iii) the default, failure or
refusal by Mobil is material and results in or could reasonably result
in substantial harm to Petro, then (iv) Petro may terminate this
Agreement upon 90 days notice. The rights and remedies given to the
parties in this Agreement are distinct, separate and cumulative, and
no one of them, whether or not exercised by the party, shall be deemed
to be in
38
<PAGE>
exclusion of any others provided for in this Agreement, or by law or
equity. The losing party shall pay the prevailing party's reasonable
attorneys' fees and costs in the event either party sues successfully
to enforce any of the provisions of this Agreement.
ARTICLE 15
ASSIGNMENT AND SURVIVORSHIP
---------------------------
15.1 Assignment by Petro. Except as set forth in the Partnership Agreement
-------------------
and subject to applicable agreements, Petro may not sell, assign,
transfer or dispose of Petro's interest in this Agreement in whole or
in part, directly or indirectly, by operation of law or otherwise,
without the prior written consent of Mobil. This requirement may not
be waived except by a writing signed by a duly authorized
representative of Mobil. Any sale, assignment, transfer or other
disposition, directly or indirectly, of the ownership or control of
any equity securities or voting securities or any other form of
ownership interest in Petro or in any partner or any shareholder of
Petro, by operation of law or otherwise, which causes a Change of
Control (as defined in the Indenture dated as of January 30, 1997,
between Petro and State Street Bank and Trust Company, Trustee),
including an individual or entity that is a significant competitor of
Mobil's domestic marketing and refining operations, shall give Mobil
the immediate right but not the obligation to terminate this Agreement
and/or to pursue its remedies hereunder and under the Marketing
Services Agreement (dated as of January 30, 1997 between Petro and
Mobil) including recovery of Mobil's branding personnel and related
unrecovered expenses incurred under both such agreements. If an
assignment by Petro is approved by Mobil pursuant to this Section
15.1, the assignee must agree in writing satisfactory to Mobil to be
bound by all of the terms and conditions of this Agreement and to be
liable for carrying out all of Petro's obligations under this
Agreement and Petro shall not be relieved of its obligations or
liabilities under this Agreement unless expressly agreed in writing by
Mobil. Any assignee must meet Mobil's reasonable standards and
requirements, including but not limited to credit and business
qualifications.
15.2 Assignment by Mobil. Mobil may assign this Agreement, franchise and
-------------------
franchise relationship only to another oil marketing and refining
company that will agree in writing to assume all of Mobil's
obligations under this Agreement. Such assignment shall not affect
Petro's rights and obligations under this Agreement in any way.
ARTICLE 16
MISCELLANEOUS PROVISIONS
------------------------
39
<PAGE>
16.1 Notices. Except as otherwise expressly provided in this Agreement and
-------
except for notices required under the PMPA, all notices under this
Agreement shall be in writing, duly signed by the party giving such
notice, and shall either be delivered via facsimile, personally (to
the Distillate Manager for notices to Mobil), or transmitted by
certified or registered mail, or other form of receipted delivery, or
overnight delivery service, to the address and party specified below,
unless changed by written notice. Except where receipt is expressly
required, notice shall be deemed given on the date such notice is
personally delivered or deposited in the United States mail or with a
courier, postage prepaid, and properly addressed.
Notice to Mobil: Notice to Petro:
Mobil Oil Corporation Petro Stopping Centers, L.P.
3225 Gallows Road 6080 Surety Drive
Fairfax, VA 22037 El Paso, TX 79905
ATTN: Distillate Business ATTN: James Cardwell, Jr.
Manager or Sr. V.P. Marketing Operations
With a copy to: With a copy to:
Petro Holdings GP Corp. Darrell R. Windham, Esq.
c/o Chartwell Investments, Inc. Kemp, Smith, Duncan & Hammond, P.C.
717 Fifth Avenue 2000 Norwest Plaza
New York, NY 10022 El Paso, TX 79901-1441
16.2 Severability. If any provision of this Agreement or portion thereof,
------------
or the application thereof to any person or circumstance, is finally
determined by a court of competent jurisdiction to be invalid or
unenforceable, such invalidity or unenforceability shall not affect
the other provisions of this Agreement.
16.3 Headings. The headings and organization of the Articles, Sections and
--------
Paragraphs of this Agreement are for convenience only and in no way
limit, amplify or otherwise affect the other provisions of this
Agreement.
16.4 Amendments. No modification of this Agreement shall be binding upon
----------
Mobil or Petro unless in writing and signed by the authorized
representative of Mobil and by the Petro. Part performance shall not
be deemed a waiver of this requirement.
16.5 Strict Performance. Either party's right to require strict
------------------
performance shall not be affected by any previous waiver or course of
dealing.
40
<PAGE>
16.6 Waivers. Unless a specific time requirement is set forth in this
-------
Agreement, no failure or delay on the part of Mobil or Petro in
exercising any of their respective rights under this Agreement shall
operate as a waiver of such rights. No single or partial exercise of
any rights under this Agreement shall preclude any other or further
exercise of such rights or the exercise of any other rights under this
Agreement or otherwise under law.
16.7 Entire Agreement. This instrument, including any attachments and
----------------
documents incorporated herein, contains the entire agreement covering
the subject matter and supersedes any prior agreement between the
parties with respect to this subject matter. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS, OR WARRANTIES AFFECTING THIS
AGREEMENT WHICH ARE NOT FULLY SET FORTH HEREIN.
16.8 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws of the State of Delaware.
16.9 Taxes. The amount of any tax, fee or duty now or hereafter imposed by
-----
Federal, state or local governments or agencies (not included in the
price or otherwise paid by Petro) in respect to or measured by (a)
this Agreement; (b) the Mobil Motor Fuels or constituent materials
covered hereby; or (c) the manufacture, storage, sale, use or handling
of Mobil Motor Fuels or materials, shall be paid by Petro to Mobil,
unless Petro shall be required by law to pay the same directly to the
governmental authority.
16.10 Right of Entry. In addition to the rights granted to Mobil under
--------------
Section 3.4, Petro shall permit Mobil or its authorized agents,
contractors or representatives to enter the premises of Petro or use
commercially reasonable efforts to arrange for Mobil or its authorized
representatives to enter the premises of Petro's Operators to take any
action to preserve the integrity of Mobil signs, trademarks, service
marks or brand names. Mobil shall not be liable for any lost profits
or similar consequential damage claim for interference with Petro's
businesses as result of such entry.
16.11 Gender. Where appropriate, masculine and feminine forms and plural
------
and singular forms shall be deemed to include the other as the context
may require.
16.12 Approval and Execution by The Parties. This Agreement shall not be
-------------------------------------
binding upon either party until approved and signed on each party's
behalf by an authorized representative.
16.13 Dispute Resolution. If any dispute arises between Mobil and Petro
------------------
relating to Sections 1.6 or 2.1(b), prior to the commencement of any
legal action to interpret or enforce those provisions, Mobil and Petro
shall first make a good faith attempt at
41
<PAGE>
Alternative Dispute Resolution (ADR). Without intending to limit the
scope or method of ADR to be employed by subsequent mutual agreement,
the parties agree and commit to at least the following effort:
(a) The party seeking to initiate the procedure (the "Initiating
Party") shall give written notice to the other party, describing
in general terms the nature of the Dispute, the Initiating
Party's claim for relief and identifying one or more individuals
with authority to settle the Dispute on such party's behalf. The
party receiving such notice (the "Responding Party") shall have
ten (10) business days within which to provide the basis for
disputing the Initiating Party's claim for relief and to
designate one or more individuals with authority to settle the
Dispute on such party's behalf. (The individuals so designated
shall be known as the "Authorized Individuals".)
(b) The Authorized Individuals shall agree to meet promptly, but in
no event later than thirty (30) days from the date of the Notice
of Dispute. If the Dispute has not been resolved within thirty
(30) days from the date of their initial meeting, any party may
request that ADR be ended in which case the parties may then
pursue available legal remedies.
(c) The parties agree that ADR attempts will be considered a
compromise negotiation for purposes of the Federal and State
Rules of Evidence and constitute privileged communications and
agree, upon request, to execute an agreement regarding that
status. The entire ADR process is confidential, and no
stenographic, visual or audio record may be made. All conduct,
statements, promises, offers, views and opinions, whether oral or
written, made in the course of the ADR by any party, by their
agents, employees, representatives or other invitees and by the
mediator are confidential and, in addition and where appropriate,
are deemed privileged. Such conduct, statements, promises,
offers, views and opinions are not discoverable or admissible for
any purposes, including impeachment, in any litigation or other
proceeding involving the parties, and may not be disclosed to
anyone not an agent, employee, expert, witness, or representative
of any of the parties, provided however that evidence otherwise
discoverable or admissible is not excluded from discovery or
admission as a result of its use in the mediation.
(d) This Section 16.13 applies only to Disputes relating to Sections
1.6 and 2.1(b). In no event may this Section 16.13 be construed
as requiring Mobil or Petro to engage in ADR prior to exercising
any other right or remedy including, without limitation, Mobil's
right to nonrenew its franchise relationship with Petro or
terminate this Agreement under the PMPA, or to withdraw its
approval to brand any Branded Site.
42
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16.14 Incorporation by Reference. Each of the Exhibits and Schedules to
---------------------------
this Agreement is incorporated herein by reference as though fully set forth in
the text of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
MOBIL OIL CORPORATION
/s/ J. D. Lavery /s/ Mark A. Skolnik
- -------------------- --------------------------------------
Witness
By: Mark A. Skolnik
-----------------------------------
Title: Manager Distillate Business
--------------------------------
Attorney-in-fact
--------------------------------
PETRO STOPPING CENTERS, L.P.
/s/ Connie Rogers /s/ Larry J. Zine
- -------------------- --------------------------------------
Witness By: Larry J. Zine
-----------------------------------
Title: Executive Vice President & CEO
--------------------------------
43
<PAGE>
Exhibit 10.36
MARKETING SERVICES AGREEMENT
BETWEEN PETRO AND MOBIL
This Marketing Services Agreement is made on January 30, 1997, between Mobil Oil
Corporation, ("Mobil"), a New York corporation having its principal place of
business at 3225 Gallows Road, Fairfax, Virginia 22037, and Petro Stopping
Centers, L.P. ("Petro"), a Delaware limited partnership having its principal
place of business at 6080 Surety Drive, El Paso, Texas 79905 ("Agreement").
INTRODUCTION
A. Petro is involved in the operation, management, development, franchising
and/or ownership of truckstops and lubrication centers and certain
businesses in connection therewith, including but not limited to the sale
of petroleum products, sundry products and services, and the operation of
restaurants, and any and all activities related to truckstops or in any
manner incidental to any of the foregoing.
B. Mobil is a multinational company engaged and having considerable experience
in the marketing of fuels and petroleum products.
C. Petro wishes to benefit from Mobil's experience and knowledge and is
interested in obtaining advice, assistance and information from Mobil on
matters such as marketing plans and strategies, growth strategies, and
improved financial performance with the view to expanding and improving
Petro's business performance.
AGREEMENT
1. THE SERVICES
------------
1.1 Mobil will provide advice and assistance to Petro on matters
pertaining to the distribution and marketing of fuels and petroleum
products as more particularly set out in Schedule A of this Agreement
(as may be amended by the parties from time to time) ("the Services").
1.2 Petro will provide, at no cost to Mobil, office space in its El Paso
office and adequate administrative support for three Mobil employees
(including the Loaned Employee as that term is defined in Schedule A).
1.3 Petro will hire and employ, at its sole cost, two accounting clerks to
report to and assist the Mobil employee with the title Supervisor,
Branded Accounting.
<PAGE>
2. ADDITIONAL SERVICES
--------------------
2.1 In the event it is determined at any time by the Petro Board,
Executive Committee or Operating Committee that outside resources,
consulting or other services, are needed to support Petro, either on
an on-going basis or on a project basis, Mobil will be given
preference to provide such resources or services as it is able on
commercially reasonable terms.
3. FEES
----
3.1 As compensation for the Services provided by Mobil, Petro shall pay to
Mobil the Marketing Services Fees and costs as set out in Schedule B
of this Agreement (as may be amended by the parties from time to time)
("the Marketing Services Fees").
4. TAXES
-----
4.1 Income taxes arising from the payment to Mobil of the Marketing
Services Fees are to be borne by Mobil.
5. ADVISORY NATURE
---------------
5.1 The Services to be performed by Mobil under this Agreement are solely
advisory in nature, and Mobil is not responsible or liable under this
Agreement for the conduct of Petro's business or for the success, or
otherwise, of it.
5.2 Mobil shall perform all Services as an independent contractor to
Petro. Mobil is not an agent or representative of Petro and, unless
authorized to do so by Petro , has no authority to act for or to bind
Petro without its prior written consent.
6. TERM AND TERMINATION
--------------------
6.1 This Agreement shall commence as of the Closing Date (as such term is
defined in the Omnibus Agreement, dated as of October 18, 1996, as
amended, among Petro, Mobil Long Haul Inc. and the other parties
thereto) and continue in effect for an initial term of 10 years. This
Agreement will automatically be extended for any number of additional
one-year periods unless, at least three months prior to the expiration
date of the initial term or any extension period, a party notifies the
other party in writing of its intention to terminate the Agreement,
whereupon this Agreement will terminate on the relevant expiration
date.
6.2 Mobil may terminate this Agreement upon notice to Petro:
(a) if there is any material change in the nature of Petro's business
or ownership of its assets,
2
<PAGE>
(b) if, in Mobil's sole opinion, to continue the Agreement would
adversely affect Mobil's highly regarded brand name or reputation,
(c) if there is any material change in the ownership of the
partnership interests in Petro or in the management of Petro, or
(d) if there is a breach of this Agreement by Petro which is not
rectified within fourteen (14) days of receiving written notice of
such breach from Mobil.
6.3 Notwithstanding anything contained herein to the contrary, 1) Petro
may terminate this Agreement on thirty (30) days prior written notice
in the event that neither Mobil nor any Mobil Affiliate (as such term
is defined in Section 9.2 below) holds an equity interest in Petro and
2) Mobil may terminate this Agreement at any time upon sixty (60) days
written notice to Petro.
7. CONFIDENTIALITY
---------------
7.1 All information and advice furnished to Petro under this Agreement and
derived from or based on Mobil research, technology, analysis,
experience, mode of operation, methodology or practice, together with
all information and advice embodied in manuals, studies, audio or
visual aids, training materials, any other documents or any written or
verbal communications, shall, if designated by Mobil as proprietary or
confidential, be regarded and treated as information proprietary to
Mobil, and shall not be duplicated, published or otherwise disclosed
by Petro, its directors, officers and employees to any third party
without the prior written approval of Mobil. Petro shall take
appropriate measures to safeguard the confidential nature of such
proprietary information and shall prevent unauthorized access thereto
at all times during the term of this Agreement. Upon termination of
this Agreement for any cause, Petro shall return to Mobil all such
proprietary information, including any and all copies. The obligations
of confidentiality and non-disclosure contained in this Section 7.1
continue in full force and effect for a period of three years beyond
any termination or expiration of this Agreement.
7.2 For purposes of Section 7.1, "confidential information" shall not
include information which is or becomes publicly available,
information acquired on a non-confidential basis, information approved
for publication by Mobil or information disclosed pursuant to a court
order so long as Petro seeks a protective order to protect such
information from further disclosure.
7.3 The provisions of Sections 7.1 and 7.2 shall be mutual. Mobil shall
observe and be bound by the same obligations as to confidential and
proprietary information of Petro as are required of Petro to Mobil in
Sections 7.1 and 7.2 above.
3
<PAGE>
8. FORCE MAJEURE
-------------
8.1 Neither Mobil nor Petro is liable for, or for any loss or damage
resulting from, any delay in performing or for failure to perform any
of its obligations under this Agreement (other than the obligation to
make payments) to the extent that delay or failure is caused in any
substantial part:
8.1.1 by compliance with any order, request or control of any
government or governmental authority or person purporting to
act for either; or
8.1.2 by anything beyond its immediate control including, but without
limitation, strikes, lockouts, acts of God, war and public
disorder.
8.2 If either party's delay in performing or failing to perform its
obligations under this Agreement is caused by any event referred to in
Section 8.1, and the delay or failure is not remedied within six (6)
months of the delay or failure first occurring, either party may
terminate this Agreement by giving the other thirty (30) days' written
notice.
9. MISCELLANEOUS
-------------
9.1 This Agreement is entered into in good faith. If any dispute arises as
to the validity, interpretation or performance of this Agreement or of
any obligation under it, the parties undertake in good faith to
attempt to resolve such dispute on amicable terms, failing which
either party may refer the dispute to a court having jurisdiction in
Delaware. This Agreement shall be subject to and governed by the laws
of the State of Delaware regardless of applicable conflict of laws
rules or principles, or the fact that either or both of the parties
now is or may become a resident of a different state or county.
9.2 Neither party may assign this Agreement or any part of it without the
prior written consent of an authorized representative of the other
party; provided, however, that Mobil may assign all or any part of its
rights and obligations under this Agreement to an Affiliate without
Petro's consent but upon notice to Petro. For purposes of this
Agreement, "Affiliate" means a company more than 50% of the voting
stock of which is owned directly or indirectly by Mobil Oil
Corporation or Mobil Corporation.
9.3 All notices and other communications under this Agreement are to be in
writing and are deemed given when delivered personally by hand against
receipt, or by facsimile transmission, or by registered mail (return
receipt requested), postage prepaid, to the parties at the following
addresses (or to such other address as a party may have specified by
notice to the other party according to this provision):
4
<PAGE>
Notice to Mobil: Notice to Petro:
Mobil Oil Corporation Petro Stopping Centers, L.P.
3225 Gallows Road 6080 Surety Drive
Fairfax, VA 22037 El Paso, TX 79905
ATTN: Manager, Distillate Business ATTN: James Cardwell, Jr.
or Sr. V.P. Marketing Operations
With a copy to: With a copy to:
Petro Holdings GP Corp. Darrell R. Windham, Esq.
c/o Chartwell Investments Kemp, Smith, Duncan & Hammond, P.C.
717 Fifth Avenue 2000 Norwest Plaza
New York, NY 10022 El Paso, TX 79901-1441
9.4 This Agreement constitutes the entire understanding and agreement
between the parties with respect to the subject matter hereof, and
supersedes any and all such inconsistent prior agreements and
understandings, whether written or oral, between the parties.
9.5 If any provision of this Agreement is finally determined by a court of
competent authority to be invalid or unenforceable, such invalidity or
unenforceability does not affect the other provisions of this
Agreement.
9.6 Except as may otherwise be provided, the failure by a party to enforce
any of its rights under this Agreement is not deemed to be a waiver of
such rights, unless such waiver is an express written waiver which has
been signed by an authorized representative of the waiving party.
Waiver of any one breach is not deemed to be a waiver of any other
breach of the same or any other provisions of this Agreement.
9.7 This Agreement may only be modified or amended in writing signed by
authorized representatives of both parties.
[The next page is the signature page]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
MOBIL OIL CORPORATION
/s/ J. D. Lavery By:/s/ Mark A. Skolnik
- ---------------------- --------------------------------------------
Witness Title: Attorney-in-fact, Manager, Distillate
Business
PETRO STOPPING CENTERS, L.P.
/s/ Connie Rogers BY: /s/ Larry J. Zine
- --------------------- --------------------------------------------
Witness
Title: Executive Vice President and
Chief Financial Officer
6
<PAGE>
Exhibit 10.37
MEMORANDUM OF UNDERSTANDING - JOINT PROJECT DEVELOPMENT
The purpose of this Memorandum of Understanding ("this Memorandum") dated as of
January 30, 1997, is to set forth our mutual understanding of the nature of the
agreements and other undertakings relating to future joint project development
that are required as part of the purchase by Mobil Long Haul Inc. ("MLHI") (an
affiliate of Mobil Oil Corporation ("Mobil")) of a limited partnership interest
in Petro Stopping Centers, L.P. ("Petro") as more specifically detailed in the
Omnibus Agreement dated as of October 18, 1996, as amended, the Interest
Purchase Agreement dated as of October 18, 1996, as amended, and various other
related agreements (the "Transaction").
1. After consummation of the Transaction ("Closing"), Petro and Mobil shall
enter into definitive agreements with respect to the following projects
which are related to the Transaction or, with respect to the items below
which do not by their terms contemplate an agreement, negotiate in good
faith in connection with the following projects:
. To develop (jointly) an 18-wheeler card, with the costs being
allocated proportionally based on relative benefit (e.g., split 50/50
if the benefit is equal). Mobil may use the 18-wheeler card outside
Petro system. All costs and benefits flowing from such use by Mobil
will accrue solely to Mobil.
. To jointly develop an on and off-site billing system for fleets,
using third party data capture, collection and billing firms if it
would be more cost effective, and to split the costs and fees
therefore 50/50.
. To, within 2 years of Closing, jointly discuss the feasibility of
forming a joint product supply company. The joint product supply
company will be a direct or indirect subsidiary of Mobil or Mobil
Corporation, will be owned by both Petro and Mobil and will purchase
and supply diesel fuel to any entity, including entities outside Petro
chain. The joint supply company will be a "for profit"organization.
The revenue will be shared as the parties may mutually agree.
. To evaluate marketing opportunities during the term of the PMPA Motor
Fuels Franchise Agreement between Petro and Mobil and determine the
feasibility of joint project development. If the parties do not
mutually agree on joint development of certain marketing programs,
either party, subject to the terms and conditions contained in the
Partnership or other related Agreements between the parties, may
individually and separately develop marketing programs. The costs and
benefits of same will accrue to the party developing the programs.
2. In entering into definitive agreements as described above, the parties
anticipate that the revenue generated from any joint project will be
allocated on the same basis as costs (above) or as the parties otherwise
mutually agree.
3. In the event that MLHI ceases being a Partner in the Petro partnership for
any reason or in the event that the PMPA Motor Fuels Franchise Agreement
between Petro and Mobil no longer exists, Mobil is entitled to use any
jointly developed project for its own business purposes, giving due
consideration to Petro's trademarks and trade names (the parties shall
agree on appropriate royalty payments for ongoing use of their respective
trademarks and trade names and/or adequate procedures for the
discontinuation of such use and reference). All jointly developed data,
systems, programs and projects shall be the joint property of Mobil and
Petro. Should there be a system associated with the jointly developed
project that Mobil
<PAGE>
would like to use for its own business purposes, Mobil shall have the right
to purchase the system for an amount equal to the system replacement cost.
Petro may continue to use jointly developed systems without additional
consideration unless and until Mobil exercises its right to purchase as
provided herein. Should Petro incur reasonable and necessary costs
associated with Mobil's use of the jointly developed projects, Mobil will
reimburse Petro for same.
4. In the event that MLHI ceases being a Partner in the Petro partnership for
any reason or in the event that the PMPA Motor Fuels Franchise Agreement
between Petro and Mobil no longer exists, Mobil and Petro have equal rights
to the data. Costs of replacing the billing system will be determined
jointly by the parties. Mobil shall have the right to buy the system for
the cost of replacing it.
5. If a party uses a jointly developed project for its own business purposes,
that party (indemnifying party) shall enter into any indemnity agreement
reasonably acceptable to the other party indemnifying the other party and
affiliates (indemnified party) against claims, costs, etc. arising out of
its use of such project and if the project is used for a joint purpose,
that the party against whom a claim is brought (indemnifying party)
indemnifies the other party (indemnified party) against the indemnifying
party's willful misconduct or gross negligence.
6. The parties agree to negotiate in good faith the definitive agreements and
other documents that will be necessary to effectuate the projects
contemplated in this Memorandum in accordance therewith and subject to all
of their terms and conditions.
7. The persons executing this Memorandum represent that they have the
requisite authority to bind each and every party upon whose behalf they are
signing without further approval or powers of attorney being required.
<PAGE>
8. This Memorandum sets forth our mutual understanding on this subject.
MOBIL OIL CORPORATION
/s/ J.D. Lavery
- ----------------------------- By: /s/ Mark A. Skolnik
WITNESS ------------------------------
Mark A. Skolnik
Distillate Business Manager
Attorney-in-Fact
PETRO STOPPING CENTERS, L.P.
/s/ Connie Rogers
- ----------------------------- By: /s/ Larry J. Zine
WITNESS ------------------------------
Larry J. Zine
Executive Vice President and
Chief Financial Officer
<PAGE>
Exhibit 10.38
January 30, 1997
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attn: Jack Cardwell
SECONDMENT LETTER AGREEMENT
---------------------------
Dear Mr. Cardwell:
By this letter, Mobil Oil Corporation, a New York corporation having its office
at 3225 Gallows Road, Fairfax, Virginia 22037 (hereinafter referred to as
"Employer") confirms its agreement with Petro Stopping Centers, L.P., a Delaware
limited partnership having its principal place of business at 6080 Surety Drive,
El Paso, Texas 79905 (hereinafter referred to as "Contractor") relating to the
temporary secondment of one (1) of Employer's employees to Contractor. The
agreement ("Agreement") is set out as follows:
1. Contractor has requested that Employer make available at Contractor's
offices the services of one of Employer's qualified employees. Contractor
previously specified the requisite qualifications of the individual and the
period of time for which his services will be required. Employer agrees to
assign such person (hereinafter referred to as the "Employee") temporarily
to Contractor for an agreed upon period of secondment, subject to the
provisions herein. Employer agrees to assign Evan C. Brudahl (or successor
of Employer's choice) to Contractor for some period of time commencing from
the date that the Transactions contemplated under the Omnibus Agreement and
Operative Agreements as defined in the Omnibus Agreement are consummated
("Closing"). Subject to Paragraphs 8 and 11 of this Agreement, Employer
currently contemplates that this period of secondment will last until July
1, 2000.
2. During the period of secondment, Employee shall be on loan from Employer to
Contractor and shall be under Contractor's day-to-day supervision.
Employee, however, shall at all times remain in the general employ of
Employer, and Contractor agrees not to attempt to interfere with the
ongoing employment relationship between Employer and Employee or to recruit
Employee as employee of Contractor during the period of secondment.
3. Subject to any applicable laws and to the Marketing Services Agreement
between Employer and Contractor ("Marketing Services Agreement"), Employer
shall determine and set the Employee's salary, wages, allowances,
retirement or redundancy payments or other remuneration of any kind
whatsoever (provided that the total compensation and benefits set by
Employer for Employee is consistent with Employer's normal salary
administration and benefits policies) and will be responsible for their
payment or provision to or for the benefit of the Employee. Employer shall
continue Employee in all of its applicable benefit plans. Employee shall
not be entitled to participate in any benefit or bonus plan maintained by
Contractor for its employees. Employer shall pay or provide for any
employment taxes payable with respect to the Employee, any employee
contributions required for continued participation in Employer's benefit
plans, and any overhead expenses associated with the assignment.
Notwithstanding anything in this Paragraph 3 to the contrary, Evan C.
Brudahl's bonus payments from Employer will be determined as the
<PAGE>
amounts he would receive if he were eligible to participate fully in the
Contractor's bonus and stock appreciation plans, beginning January 1, 1997,
at a level commensurate with his responsibilities within Contractor's
company. After Employer's February 1997 stock option grant, Evan C. Brudahl
shall not be eligible to receive stock options from Employer during the
term of his secondment.
4. Contractor shall reimburse Employer promptly for all compensation, benefits
and other expenses of Employer in connection with the secondment of the
Employee upon the presentation of Employer's invoices therefor. Unless
otherwise agreed to, Contractor shall bear directly reimbursable employee
business expenses of the Employee consistent with Contractor's
reimbursement policy. It is understood that Employee's compensation is not
currently subject to the withholding of income tax in Texas.
5. Employer shall pay for Employee's (and, if applicable, his spouse's and
dependents') relocation to El Paso from Employee's residence at the time he
is notified of his assignment to Contractor's offices, as well as the cost
of shipping his household and personal effects.
6. During the period of secondment, Employee shall accrue vacation,
bereavement and sick leave in accordance with Employer's policies. However,
the scheduling of Employee's vacation will be subject to Contractor's
reasonable approval. Notwithstanding anything to the contrary in this
Paragraph 6, Evan C. Brudahl will be eligible for four (4) weeks of
vacation per calendar year. In return for Evan C. Brudahl's agreement to
forego a fifth week of vacation for which he is eligible under Employer's
vacation program and to comply with Contractor's holiday schedule,
Contractor agrees that Mr. Brudahl's cash bonus referenced in Paragraph 3
above (without regard to any payments in respect of stock appreciation
rights) will be at least $3,000 in any calendar year.
7. Contractor shall have the right at any time after the commencement of the
secondment to notify Employer that the Employee is performing at an
unacceptable level and, therefore, is no longer required by Contractor.
Effective one hundred and twenty days after Employer's receipt of such
notice, the secondment shall terminate with respect to such Employee and
such Employee shall cease to be under the supervision of Contractor. The
notice period may be shorter if mutually agreed or if the circumstances
warrant it.
8. Employer retains the sole right to retain and/or dismiss Employee and, in
its absolute discretion, may unilaterally limit Employee's length of
assignment under this Agreement. Employer will endeavor to provide
Contractor with one hundred and twenty days notice in the event that
Employer decides to shorten the length of assignment. The notice period may
be shorter if the circumstances warrant it. Employer undertakes to confer
with Contractor regarding Employee's performance hereunder.
9. Should Petro Holdings GP Corporation take control of the Board of
Contractor's company under the Partnership or any other Agreement to which
Contractor is a party and, without cause (which will be determined by Jack
Cardwell, Sr. or Mobil's Distillate Business Manager), removes Evan C.
Brudahl from his responsibilities as Petro Sr. Vice President Strategic
Planning and Development (or successor equivalent position title), Mr.
Brudahl will be entitled to, and Contractor will reimburse Employer for,
payment of an amount of money equal to his regular base salary for the
period of time commencing on the date of such removal through July 1, 2000,
such amount not to exceed an amount equal to Mr. Brudahl's base salary for
one year.
<PAGE>
10. The parties agree that this Agreement memorializes the arrangement between
them and it supersedes any and all prior agreements respecting the subject
matter herein addressed. The provisions of this Agreement and all rights,
duties and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware.
11. At any time, Employer may terminate this Agreement due to extraordinary
circumstances and upon request by the Employee by giving written notice to
Contractor not less than one hundred and twenty days prior to the effective
date thereof. Upon such termination, Contractor shall be liable only for
charges incurred prior to the effective date of such termination plus such
additional charges as are determined by the Employer to be required in
connection with the termination of the Agreement and relocating the
Employee.
If this Letter Agreement accurately sets forth the terms and conditions of our
agreement, please so indicate by having an authorized representative sign the
duplicate copy of this letter and return it to us.
Very truly yours,
MOBIL OIL CORPORATION
By: /s/ Mark A. Skolnik
---------------------------------------
Mark A. Skolnik
Manager, Distillate Business
Attorney-in-Fact
Accepted and Agreed to this
30th day of January, 1997
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
---------------------------------------------
Larry J. Zine, Executive Vice President & CFO
<PAGE>
EXHIBIT 10.39
MASTER SUPPLY CONTRACT
FOR
RESALE OF OILS AND GREASES
THIS SUPPLY CONTRACT is made as of January 30, 1997 between MOBIL OIL
CORPORATION ("Seller"), with offices at 3225 Gallows Road, Fairfax, Virginia and
PETRO STOPPING CENTERS, L.P. ("Buyer"), with offices at 6080 Surety Drive, El
Paso, Texas 79905 ("Supply Contract").
1. Products; Quantities. Seller agrees to sell and Buyer agrees to purchase,
---------------------
on the terms and conditions of this Supply Contract, Mobil lubricants for those
Buyer operated Truckstops located at the addresses set forth on the "List of
Locations" at Exhibit 1, attached to and made part of this Supply Contract (the
---------
"Truckstop Locations"). As Buyer adds new Truckstop Locations to its Truckstop
chain, Exhibit 1 will be modified to include them.
---------
Buyer agrees to: (i) feature Mobil Delvac 1300 Super at all Truckstop Locations
operated by Buyer, and (ii) use commercially reasonable efforts to purchase a
minimum of 10,000,000 gallons of Mobil lubricants during the term of this Supply
Contract. Buyer agrees not to allow advertising or promotional materials of
competitive brands of engine oil outside any of its facilities, including the
fuel islands. However, Buyer may display non-promotional signs for competitive
brands of engine oil inside the lube bays and Buyer may display advertising
materials of a competitor that purchases advertising space through Motor Media.
In addition, Buyer will ensure that 50% of shelf space in the Truckstop
Locations dedicated to commercial engine oils, heavy duty motor oils only, (CEO)
will be used for the display of Mobil Delvac engine oils . Buyer and Seller
agree to actively promote Mobil Delvac 1300 Super and other Mobil lubricants
during the term of this Supply Contract, including participation in jointly
developed and national CEO promotions. If Petro's lubricant sales decrease
substantially (defined as a 5% decrease in sales of competitive lubricants
during a promotional period from the prior 90 day non-promotional period) for a
sustained period of time (more than 90 days) because of the limitation on
Petro's ability to advertise or promote competitive brands of engine oil, Mobil
agrees to meet with Petro to discuss this limitation on advertising and
promotions of competitive brands of engine oils and to negotiate in good faith
modifications to this provision or additional actions to be taken. For purposes
of this paragraph, promotions of competitive brands of engine oils include
giveaways, rebates, coupons and the like.
Subject to and in accordance with Buyer's current contractual obligations, Buyer
will discontinue the sale of private label lubes at Buyer's Truckstop Locations
to the extent that replacement of Buyer's private label products with Mobil
brand oils and greases is economically attractive for Buyer under commercial
terms to be mutually acceptable to Buyer and Seller.
Buyer agrees to use its commercially reasonable efforts to ensure that it
increases its sales of Mobil lubricants in order to meet its purchase
obligations. These efforts will include but not be limited to:
<PAGE>
a. Displaying an internally illuminated Mobil Delvac sign, provided at
Seller's sole cost, (dimensions of no less than 4' x 6', local
permitting withstanding) on the most visible side of the garage. A metal
sign (dimensions to be determined) will be used at those locations that
cannot accommodate an internally illuminated sign.
b. Displaying one Mobil Delvac snaplock sign and bay banner, provided at
Seller's sole cost, inside the garage.
c. Displaying one Mobil Delvac snaplock sign, provided at Seller's sole
cost, located inside the waiting area, and one Delvac ACCUTRACK sign,
provided at Seller's sole cost.
d. Subject to existing uniform supply company agreements, ensuring that all
service writers wear Mobil Delvac patches, provided at Seller's sole
cost, on their shirts/jackets and all garage personnel wear Mobil Delvac
hats, provided at Seller's sole cost.
e. Participating in all promotions offered by Seller and not displaying
promotions of competitive oil suppliers.
f. Not participating in any service writer or garage personnel incentive
programs offered by competitive oil suppliers for so long as Seller
offers these programs in the same calendar year.
g. Use commercially reasonable efforts to encourage existing and future
franchisees to purchase, promote and sell Mobil lubricants as set forth
herein.
Purchase obligations are anticipated to be as follows:
During year 1 of this Supply Contract, 625,000 gallons/year of Mobil
lubricants
During year 2 of this Supply Contract, 725,000 gallons/year of Mobil
lubricants
During year 3 of this Supply Contract, 750,000 gallons/year of Mobil
lubricants
Aggregate for years 1-3 2,100,000 gallons of Mobil lubricants
During year 4 of this Supply Contract, 850,000 gallons/year of Mobil
lubricants
During year 5 of this Supply Contract, 950,000 gallons/year of Mobil
lubricants
During year 6 of this Supply Contract, 1,050,000 gallons/year of Mobil
lubricants
Aggregate for years 4-6 2,850,000 gallons of Mobil lubricants
During year 7 of this Supply Contract, 1,150,000 gallons/year of Mobil
lubricants
During year 8 of this Supply Contract, 1,250,000 gallons/year of Mobil
lubricants
During year 9 of this Supply Contract, 1,275,000 gallons/year of Mobil
lubricants
During year 10 of this Supply Contract, 1,375,000gallons/year of Mobil
lubricants
Aggregate for years 6-10 5,050,000 gallons of Mobil lubricants
- 2 -
<PAGE>
Grand Aggregate volume for 10 year term = 10,000,000 gallons of conventional
Mobil lubricants
The purchase obligations for any one year are agreed by the parties to be
targets. However, the aggregate volumes (e.g., aggregate of years 1-3, 4-6, and
7-10) as well as the aggregate volume over the 10 year term (10,000,000 gallons)
are agreed by the parties to be contractual commitments. Should Petro not meet
these purchase obligations, Petro shall, at Mobil's request, meet with Mobil to
discuss the purchase obligations and results and to negotiate in good faith
modifications to this provision or additional actions to be taken.
The term "Year" means a Calendar Year (pro-rated to 11/12th for the year 1997)
beginning on the first day of January after the Effective date of this Supply
Contract.
For purposes of this Supply Contract, 8 pounds of grease equals 1 gallon of
conventional oil and 1 gallon of synthetic oil equals 4 gallons of conventional
oil. As used in this Supply Contract, the terms "Seller's product" and "Mobil
lubricants" are used interchangeably.
A list of Mobil lubricants to be purchased by Buyer is set forth on Exhibit 2,
---------
attached to and made part of this Supply Contract. Mobil lubricants, grades,
trademarks, and packaging shall be those marketed and used by Seller at times of
deliveries for similar buyers in Buyer's area, all as determined by Seller.
Seller may change the grade, specifications, characteristics, delivery package,
brand name, or other distinctive designation of any of Seller's product and such
products as so changed shall remain subject to this Supply Contract. Buyer may
purchase any combination of lubricants listed on Exhibit 2 in order to comply
---------
with the purchase obligations set forth above.
2. Term. The term of this Supply Contract is for a period of ten (10) years,
-----
beginning January 30, 1997 and ending January 30, 2007.
3. Prices, Terms; Deliveries.
--------------------------
(a) Prices. Initial prices of Seller's products are set forth on Exhibit
------- -------
2. Prices are prior to taxes.
-
(b) Terms of Payment. Net 15 prox (15th day of the month following the
-----------------
month in which delivery is made) or Net 30 days from the day of
delivery. Cash discounts, if any, are not applicable to taxes, freight
charges, or container charges. Seller shall forward invoices for Mobil
products purchased by individual Truckstop Locations to Buyer for
payment within 30 days.
(c) Deliveries. Deliveries of Mobil lubricants shall be made by Seller's
-----------
authorized distributors, selected by Seller in its sole discretion, and
shall be promptly received by Buyer. Minimum order quantity for tank
truck delivery of Mobil products is 6,000 gallons; minimum order
quantity for packaged Mobil lubricants (drums and pails) is 100
gallons; minimum order quantity for tankwagon delivery is 200 gallons.
Deliveries made below minimums are subject to a small order premium.
Buyer will convert bulk storage facilities to accommodate 6,000 gallon
tank loads of Mobil
- 3 -
<PAGE>
Delvac 1300 Super if and when Buyer and Seller agree to the economic
viability of doing so.
Title to, and all risk of loss of or damage to, any of Seller's
products shipped to Buyer passes to Buyer at the delivery point.
Seller's products are received by Buyer when delivered to Buyer at the
delivery point specified by the ordering Truckstop Location.
If Buyer defaults in the payment of any indebtedness to Seller, in
addition to any other rights it may have, Seller may immediately change
the terms of payment and may suspend deliveries of all of Seller's
products and apply any funds that Buyer may have on deposit in Seller's
custody to the payment of the indebtedness.
(d) Price Adjustment. Seller may adjust the price or terms of payment for
-----------------
Seller's products at any time by giving Buyer at least thirty (30) days
written notice.
4. Taxes. The amount of any present or future governmental tax, fee, duty or
------
other imposition (not included in the price or otherwise paid by Buyer) on or
measured by: (a) this Supply Contract; (b) Seller's products or constituent
materials covered by this Supply Contract; or (c) the manufacture, sale, use,
transportation or handling of Seller's products or materials shall be paid by
Buyer to Seller, unless Buyer is required by law to make payments directly to
the governmental taxing unit. Any and all exemptions from taxes claimed by Buyer
must be set forth on Exhibit 1.
---------
5. Trademarks; Trade Dress; Brand Names; Advertising. Buyer shall use
--------------------------------------------------
Seller's trademarks, trade dress, and brand names ("Trademarks") to identify and
advertise Seller's products. The Trademarks shall not be used for any other
purposes or in any manner that may confuse or deceive the public.
Buyer shall not mix any other products with Mobil lubricants or adulterate them
in any way, and shall not use the Trademarks in connection with the storage,
handling, dispensing, or sale of any adulterated, mixed or substituted Mobil
lubricants. Seller may take samples from Buyer's tanks to ensure product
integrity.
All advertising, including color schemes, of Seller's products are subject to
Seller's approval. Any violation of the provisions of this Paragraph 5 gives
Seller the right to immediately terminate this Supply Contract. On any
termination of this Supply Contract, Buyer shall immediately discontinue: (a)
referring to Seller, (b) using Seller's color schemes, Trademarks and slogan,
(c) advertising Seller's products, (d) return to Seller, at no cost to Seller,
all signs, advertising and promotional material in Buyer's possession, and (e)
repay all amounts owing to Seller in accordance with this Supply Contract.
Buyer acknowledges that injunctive relief is an adequate remedy for Buyer's
violation of this Paragraph 5. Buyer agrees to pay Seller's reasonable attorney
fees if Seller institutes legal action to enforce any provisions of this
Paragraph 5 and prevails in such legal action.
- 4 -
<PAGE>
6. Containers. All containers on which Seller charges a deposit ($20.00
-----------
deposit on drums) remain Seller's property, must be used only for the original
contents, and must be returned when empty to Seller's shipping point, freight
collect. If Seller maintains a regular pick-up service in Buyer's area, Seller
may collect containers on notice from Buyer. For purposes of this Paragraph 6,
empty means does not contain: solids, trash, unpourable liquid exceeding 1 inch
or any pourable liquid.
Deposit charges are payable without discount when payments for the contents are
due. Deposit charges are refundable if the containers are returned in their
delivered condition, less ordinary wear, within ninety (90) days after delivery.
If containers are not returned, Seller may retain the deposit charges in
settlement for the containers and expenses.
7. Product Quality Control. Buyer has a duty to protect the quality of
------------------------
Seller's products delivered to it by Seller or Seller's authorized distributors.
Seller represents that the Mobil lubricants that it supplies under this
Agreement: 1) meet applicable API standards and 2) will meet future applicable
API standards.
8. Claims; Release. Seller has no liability for any defect in quality, or
----------------
shortage in quantity, of any of Seller's products delivered unless Buyer gives
Seller or Seller's authorized distributor notice of Buyer's claim within: (a)
two (2) days after delivery for shortages in quantity of Seller's products, or
(b) within four (4) days after delivery for quality deficiencies, and further
provides Seller with a reasonable opportunity to inspect Seller's products and
take test samples.
Any other claim by Buyer of any kind, based on or arising out of this Supply
Contract or otherwise, is waived and barred unless Seller is given written
notice within one hundred eighty (180) days after the event, action, or inaction
to which the claim relates. Further, any claim is waived by Buyer and barred
unless asserted by the commencement of an action within twelve (12) months after
the event, action, or inaction to which the claim relates. Seller is not liable
for prospective profits or special, indirect, or consequential damage.
9. Contingencies. Seller shall not be liable for loss, damage, or demurrage
--------------
due to any delay or failure to perform:
(a) because of compliance with any action, order, direction, request, or
control of any governmental authority; or
(b) when the supply or purchase of Seller's products or any facility of
production, manufacture, storage, transportation, distribution, or
delivery is interrupted, unavailable, or inadequate because of wars,
hostilities, public disorders, acts of enemies, sabotage, strikes,
lockouts, labor or employment difficulties, fires, floods, acts of God,
accidents or breakdowns, plant shutdowns for repairs, maintenance or
inspection, weather conditions, or for any other cause that is beyond
Seller's reasonable control when acting in good faith and in the
ordinary course of business, whether or not similar to any of the
foregoing.
- 5 -
<PAGE>
Seller is not required to remove any cause or replace the affected
source of supply or facility if it involves additional expense or a
material departure from normal practices.
If, for any cause, there is, or Seller believes in its reasonable opinion
there may be, a shortage of supplies, for whatever reason, so that Seller
is or may be unable to meet the demands of all of its customers of all
kinds, Seller may allocate to and among its customers in each class of
trade quantities of Seller's products as Seller determines in the exercise
of its ordinary business judgment it has available for distribution to that
class of trade from any given terminal or point of supply, provided that
Seller's plan of allocation shall not unreasonably discriminate between
Buyer and Seller's other customers in that class of trade.
Seller shall not be required to make up any deliveries or quantities
omitted under the provisions of this Paragraph 9, including but not limited
to, deliveries or quantities omitted pursuant to Seller's right to allocate
Seller's products among its customers, nor shall Seller be liable for any
damages or losses in connection with omitted deliveries or quantities.
In all instances when a decision or determination of Seller is referred to
in this Paragraph 9, the decision or determination shall be made in
Seller's sole and absolute discretion acting in the ordinary course of
business.
10. Indemnity. Buyer shall defend and indemnify Seller, and its agents,
----------
servants, employees, successors, and assigns from:
(i) any fines, penalties, charges, or expenses, for violations of any
law, ordinance or regulation, caused by any act or omission, whether
negligent or otherwise, of Buyer or its agents, servants, employees,
or others under it; and
(ii) any claims, losses, liability, suits, liens and expenses for death,
personal injury, property damage, or any other injury or claim
arising out of the use, occupancy, operation, services offered by,
or maintenance of Buyer's Truckstop Locations (including adjacent
sidewalks, drives, and curbs), lubrication equipment, or Buyer's
other businesses or any of its operators, lessees, agents,
contractors, employees, customers, or others under it.
Seller shall defend and indemnify Buyer, and its agents, servants,
employees, successors, and assigns from:
(i) any fines, penalties, charges or expenses, for violations of any
law, ordinance or regulations caused by any act or omission, whether
negligent or otherwise, of Seller or its agents, servants, employees
or others under it; and
(ii) any claims, losses, liability, suits, liens and expenses for death,
personal injury, property damage, or any other injury or claim
arising out of Seller's, or its agents', contractors', employees' or
others' under it, performance under or nonperformance of this
Agreement.
- 6 -
<PAGE>
The provisions of Paragraphs 8 and 10 survive any termination or nonrenewal of
this Supply Contract, however arising.
11. Permits. Buyer must obtain all required permits and licenses in
--------
connection with its operation of the Truckstop Locations and must comply in all
material respects with all applicable governmental laws and regulations.
12. Seller's Right to Terminate; Default; Payments Due on Termination.
------------------------------------------------------------------
(a) If Buyer is in default under this Supply Contract, or under any other
agreement between the parties: (i) Seller may suspend deliveries (to
the Truckstop Location in default) during the default; (ii) Seller
shall provide notice of default to Buyer and Buyer shall have thirty
(30) days to cure such default; thereafter, if the default continues,
Seller may terminate this Supply Contract with respect to the Truckstop
Location in default and the payment provisions in Section 12(b) shall
apply.
(b) Upon providing written notice to Buyer, Seller may immediately
terminate this Supply Contract (with respect to one or more Truckstop
Locations) upon the occurrence of one or more of the following events:
(i) Buyer or the Truckstop Location's failure to comply with the
provisions of Section 5 of this Supply Contract;
(ii) Buyer does not meet its purchase obligations as set forth in this
Supply Contract;
(iii) without Seller's prior written consent, more than 30% of the
voting shares or other form of ownership and control of Buyer is
sold or transferred to a party that Seller considers to be a
direct competitor;
(iv) Buyer becomes insolvent; an insolvency, receivership or
bankruptcy proceeding is commenced by or against Buyer; or Buyer
makes an assignment for the benefit of creditors; or
(v) Buyer attempts to assign or otherwise transfer its interest in
this Agreement in contravention of the terms of Section 20.
On or prior to the effective date of any termination (partial or whole) of this
Supply Contract, funds owed by Buyer to Seller with respect to the affected
Truckstop Location(s), including: (i) amounts owing Seller for Buyer's
purchases of Seller's products, and (ii) any other amounts outstanding shall
become immediately due and payable to Seller.
13. Buyer's Right to Terminate.
---------------------------
- 7 -
<PAGE>
If Seller defaults under this Supply Contract, Buyer shall provide written
notice to Seller and Seller shall have thirty (30) days to cure such default;
thereafter, if the default continues, Buyer may terminate this Supply Contract
upon providing thirty (30) days written notice to Seller.
14. Representations and Assurances. Seller is entering into this Supply
-------------------------------
Contract in reliance on Buyer's qualifications and representation to Seller of
its desire to operate the Truckstop Locations selling Mobil lubricants. Buyer
acknowledges that its conduct impacts Seller's products, Trademarks, and other
Mobil retailers, distributors, and dealers; therefore, Buyer agrees to conduct
its business in a manner that maintains and enhances public acceptance of Mobil
lubricants, Trademarks, and Mobil retailers, distributors, and dealers.
At all times, Buyer shall keep visible and legible Seller's logos, signs and
Trademarks used in connection with the sale of Mobil lubricants inside of
Buyer's Truckstop Locations.
15. Relation of Seller and Buyer. Buyer and Seller are independent
-----------------------------
businesses, and nothing in this Supply Contract creates any right in Seller or
Buyer to exercise any control over, or to direct in any respect, the conduct or
management of the other party's business, subject only to each party's
performance of their respective obligations set forth in this Supply Contract.
Neither Buyer nor any person performing work at the Truckstop Locations for, or
on behalf of, Buyer shall be considered as an employee or agent of Seller.
16. Notices. All notices under this Supply Contract, except those under
--------
Paragraph 5, must be in writing and delivered personally or sent by certified
mail to the address set forth below unless changed by notice. Notice by mail is
effective 3 days from the postmark date.
Address for Seller: Mobil Oil Corporation
3225 Gallows Road
Fairfax, Virginia 22037
Attn: Commercial Engine Oil Marketing Manager
With a copy to: Mobil Oil Corporation
Customer Support Center
40 Liberty Boulevard
Malvern, PA 19355
With a copy to: Petro Holding GP Corporation
c/o Chartwell Investments
717 Fifth Avenue
New York, NY 10022
Address for Buyer: Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
With a copy to: Darrell R. Windham, Esq.
- 8 -
<PAGE>
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, TX 79901-1441
17. Severability. If any provision or any portion of this Supply Contract or
-------------
the application of it to any person or circumstance is finally determined by a
court of competent jurisdiction to be invalid or unenforceable, the invalidity
or unenforceability shall not affect the other provisions of this Supply
Contract.
18. Entire Agreement. This instrument (including the documents referred to
-----------------
in this instrument and documents incorporated herein) contains the entire
agreement covering the subject matter, and supersedes any prior discussions
between the parties relating to the subject matter of this Supply Contract.
THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR WARRANTIES AFFECTING THIS
SUPPLY CONTRACT WHICH ARE NOT FULLY SET FORTH IN THIS SUPPLY CONTRACT.
19. Number of Truckstop Locations. Buyer and Seller acknowledge that the
-----------------------------
number of Truckstop Locations may change during the term of this Supply Contract
requiring additions or deletions to the number and location of Truckstop
Locations serviced by particular Mobil distributors and time for Seller to
prepare the necessary administrative connections so that deleted or added
Truckstop Locations are properly serviced. Buyer agrees to provide timely
notification of such events to Seller, enabling Seller to accommodate such
changes.
20. Miscellaneous. Any attempt to assign this Supply Contract by Buyer
--------------
without obtaining Seller's prior written consent is void and constitutes a
default of this Supply Contract. The paragraph headings of this Supply Contract
are for convenience only and do not limit, amplify, or otherwise affect its
terms and conditions. Seller's right to require strict performance shall not be
affected by any previous waiver or course of dealing. Modifications to this
Supply Contract must be in writing and signed by an authorized representative of
each party.
21. Governing Law. This Supply Contract shall be construed and enforced in
--------------
accordance with the laws of Delaware.
EXECUTED as of the date first above written.
WITNESS: MOBIL OIL CORPORATION
/s/ J.D. Lavery /s/ Mark A. Skolnik
- -------------------- --------------------------
By: Mark A. Skolnik
------------------------
Its: Manager, Distillate Business
------------------------------
Attorney-in-Fact
------------------------------
- 9 -
<PAGE>
WITNESS: PETRO STOPPING CENTERS, L.P.
/s/ J.H. Breed /s/ Larry J. Zine
- ----------------------- -----------------------------
By: Larry J. Zine
---------------------------
Its: Executive Vice President
--------------------------
- 10 -
<PAGE>
EXHIBIT 10.40
CHARTWELL INVESTMENTS INC.
717 Fifth Avenue
23rd Floor
New York, New York 10022
January 30, 1997
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attention: President
Dear Sirs:
This letter is to confirm our agreement that in connection with the
transactions (the "Transactions") contemplated in the Omnibus Agreement dated as
of October 18, 1996 by and among James A. Cardwell and James A. Cardwell, Jr.
and affiliates, Petro Holdings GP Corp., a Delaware corporation, Petro Holdings
LP Corp., a Delaware corporation, Mobil Long Haul Inc., a Delaware corporation,
and Petro Stopping Centers, L.P., a Delaware limited partnership, you have
agreed to reimburse us at the Closing of the Transactions for the reasonable
out-of-pocket costs and expenses which we have incurred in connection with the
Transactions. You have also agreed to pay us a fee for advisory services we
have rendered to you in connection with the financing of the Transactions (the
"Financing") at the Closing equal to: (a) one percent (1%) of total
capitalization of Petro Stopping Centers, L.P., a Delaware limited partnership
and its affiliates ("Petro), including, without limitation, all debt facilities,
preferred and common equity interests, but excluding the $30 million expansion
credit facility (the "Expansion Facility"); plus (b) one half percent (1/2%) of
the Expansion Facility (collectively, the "Advisory Fee").
These services are attributable to acting as exclusive financial advisor
with respect to the Transactions and the Financing and negotiating and assisting
with the documentation related to the Financing (collectively, the "Advisory
Services").
Each of the parties hereto acknowledges that the Advisory Services for
which the Advisory Fee is to be paid hereunder have been heretofore rendered by
Chartwell Investments Inc. at your request in connection with the Financing as
described above.
Petro agrees to indemnify and hold Chartwell Investments Inc., its
officers, employees and agents (each an "Indemnified Party") harmless against
any liability, claim, loss or expenses, as and when incurred ("Damages"), to
which an Indemnified Party may become subject as a result of the performance of
the services described herein; provided, that the Company shall not be liable to
--------
an Indemnified Party for Damages resulting primarily and directly from
<PAGE>
Petro Stopping Centers, L.P.
January 30, 1997
Page 2
the Indemnified Party's bad faith, gross negligence or willful misconduct, and
Chartwell Investments Inc. shall so indemnify the New Partners (as defined in
the Omnibus Agreement) for Damages arising from its bad faith, gross negligence
or willful misconduct.
The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties hereunder and their
successors and assigns and representatives, and the obligations and liabilities
assumed hereunder by the parties hereto shall be binding upon their respective
successors and assigns.
This Agreement shall not be assignable by the parties hereto without mutual
written consent.
This Agreement shall be subject to and governed by the laws of the State of
Delaware without regard to its conflict of laws principles and rules.
If the foregoing comports with your understanding of our agreement, please
sign below, whereupon this letter shall be a valid and binding agreement.
Very truly yours,
CHARTWELL INVESTMENTS INC.
By:/s/ Todd Berman
------------------------------
Name: Todd R. Berman
----------------------------
Title: President
---------------------------
ACCEPTED AND AGREED AS OF THIS
30th DAY OF January, 1996
PETRO STOPPING CENTERS, L.P.
By: Larry J. Zine
------------------------------
Name: Larry J. Zine
----------------------------
Title: Executive Vice President
---------------------------
<PAGE>
EXHIBIT 10.41
MANAGEMENT CONSULTING AGREEMENT
-------------------------------
THIS MANAGEMENT CONSULTING AGREEMENT (the "Agreement"), dated as of
January 30, 1997, by and between Petro Stopping Centers, L.P., a Delaware
limited liability partnership (the "Company"), and Chartwell Investments Inc., a
Delaware corporation (the "Consultant").
WHEREAS, the Company desires to avail itself of the expertise
possessed by the Consultant and consequently has requested that the Consultant
provide it, from time to time, with certain management consultant and advisory
services related to the business, strategy, administration and affairs of the
Company and the review and analysis of certain financial and other transactions;
and
WHEREAS, the Consultant and the Company agree that it is in their
respective interests to enter into a management consulting agreement whereby,
for the consideration specified herein, the Consultant shall provide such
services as an independent consultant to the Company.
NOW THEREFORE, in consideration of the mutual premises and covenants
contained herein, the Company and the Consultant agree as follows:
1. Retention of Consultant. The Company hereby retains the
-----------------------
Consultant, and the Consultant hereby accepts such retention, upon the terms and
conditions set forth in this Agreement.
2. Effective Date/Term. This Agreement shall commence as of the
-------------------
Closing Date (as such term is defined in the Omnibus Agreement (the "Omnibus
Agreement") dated as of October 18, 1996, by and among James A. Cardwell, Sr.
("Cardwell, Sr."), James A. Cardwell, Jr. ("Cardwell, Jr.") JAJCO II, Inc., a
Delaware corporation ("JAJCO"), Petro, Inc., a Texas corporation ("Petro" and
together with Cardwell, Sr., Cardwell, Jr., and JAJCO, collectively, the
"Cardwell Group"), Mobil Long Haul, Inc., a Delaware corporation ("Mobil"),
Petro Holdings GP Corp., a Delaware corporation ("Chartwell GP"), Petro Holdings
LP Corp., a Delaware corporation ("Chartwell LP", and together with Chartwell
GP, "Chartwell") and the Company, and shall continue through the period ending
on the tenth anniversary of such date, subject to renewal pursuant to paragraph
5 below (such period, including any renewal hereinafter referred to as the
"Term").
3. Management Consulting Services.
------------------------------
(a) The Consultant shall advise the Company concerning such
management matters relating to the Company's personnel, business and acquisition
strategy, administration and proposed
<PAGE>
financial transactions, and other senior management matters relating to the
Company as the Company shall reasonably and specifically request. The
Consultant shall not be required to devote any specified amount of time to any
such request, and shall be required to devote only so much time to any such
request as the Consultant shall, in its reasonable discretion, deem necessary to
complete such services. Such consulting services shall, in the Consultant's
reasonable discretion, be rendered in person or by telephone or other
communication. The Consultant shall (i) use its reasonable efforts to deal
effectively with all subjects submitted to it hereunder and (ii) endeavor to
further, by performance of its services hereunder, the policies and objectives
of the Company.
(b) The Consultant shall perform all such services as an
independent contractor to the Company. The Consultant is not an agent or
representative of the Company and has no authority to act for or to bind the
Company without its prior written consent.
(c) Subject to the provisions of the Amended and Restated
Partnership Agreement of the Company (the "Partnership Agreement"), this
Agreement shall in no way prohibit the Consultant from engaging in other
activities, whether or not competitive with any business of the Company. The
parties hereto agree that, in the event additional services not contemplated
hereby are requested of the Consultant, the parties hereto shall negotiate the
scope of, and appropriate compensation for, such additional services.
4. Compensation.
------------
(a) As compensation for the services provided by the Consultant
hereunder, the Company shall pay to the Consultant, as provided herein, an
annual fee (the "Management Fee") of $600,000 for each fiscal year, of the
Company commencing with the Closing Date during the Term. The Management Fee
shall be payable semi-annually, in advance on the first day of the first and
third quarters of each fiscal year of the Company during the Term (except as
provided in Section 4(e) below), or, if such date is not a business day, on the
next succeeding business day. The Company shall pay the Consultant on the date
hereof fee for the first half of 1997.
(b) Beginning with the fiscal year commencing January 1, 1997,
the Company shall pay to the Consultant an additional annual fee of $100,000
(the "Incentive Management Fee") for each fiscal year that the Company's and its
subsidiaries' and affiliates' EBITDA (as used in the Partnership Agreement)
derived from the numbers reported in the audited consolidated financial
statements of the Company and its subsidiaries for such fiscal year equals or
exceeds $45,000,000. The Incentive Management Fee, if any, shall be payable
within ten business days after delivery to the Company of the audited financial
statements for the fiscal year for which the Company is obligated to pay such
Incentive Management Fee.
-2-
<PAGE>
Notwithstanding that this Agreement expires if not renewed pursuant to Section 5
thereof and subject to the provisions of Section 14, if the EBITDA for the
fiscal year in which expiration occurs exceeds the amount which would
necessitate payment of an Incentive Management Fee had the agreement not
expired, then the Consultant shall be eligible to receive, and the Company shall
be obligated to pay, the Incentive Management Fee that would otherwise have been
payable if the Agreement remained in effect for the fiscal year in which the
expiration occurred. This Section 4 shall survive the expiration or termination
of this Agreement.
(c) In addition to the payment of the Management Fee and the
Incentive Management Fee, the Company shall reimburse the Consultant for all
out-of-pocket costs and expenses reasonably incurred by the Consultant in
connection with the provision of services hereunder, including legal,
accounting, temporary and overtime secretarial, travel and entertainment fees
and expenses, within 30 days after receipt of a statement of such expense from
the Consultant.
(d) Subject to Section 14 hereof, if the Agreement is terminated
at the Company's option upon 30 days prior notice to the Consultant (the
"Company's Termination Option"), the Consultant shall, within five business days
of termination, receive a payment equal to the amount of compensation the
Consultant would have received thereunder, absent the exercise of the Company's
Termination Option, if the Agreement had not been terminated until the date on
which the Agreement would next have expired if not renewed. For purposes of
determining the Income Management Fee payable to the Consultant pursuant to this
Section 4(d) for each fiscal year after the fiscal year in which the Agreement
was terminated, EBITDA shall be the EBITDA derived for the audited consolidated
financial statement of the Company and its subsidiaries for the fiscal year
immediately preceding the date of termination.
(e) The Management Fee and the Incentive Management Fee shall be
pro rated in the fiscal year in which this Agreement expires by its terms if not
renewed.
5. Renewal. This Agreement shall automatically be renewed by the
-------
Board of Directors for additional 1-year periods unless the Board of Directors
of the Company determines not to renew the Agreement and gives written notice to
the Consultant of non-renewal at least 60 business days prior to the date in
which the Agreement would otherwise have been renewed. For purposes of
determining the Incentive Management Fee for fiscal years during any renewal
period, the required levels of EBITDA for the Consultant to earn the Incentive
Management Fee for each fiscal year during any renewal shall remain those set
forth in Section 4(b) hereof.
-3-
<PAGE>
6. Indemnification. The Company agrees to indemnify and hold the
---------------
Consultant, its officers, employees and agents (each an "Indemnified Party")
harmless against any liability, claim, loss or expenses (the "Damages") to which
an Indemnified Party may become subject as a result of the performance of the
Consultant's services hereunder, such claims, losses or expenses shall be paid
when and as incurred; provided that the Company shall not be liable to an
Indemnified Party for Damages resulting primarily and directly from the
Indemnified Party's bad faith, gross negligence or willful misconduct and
Consultant shall so indemnify the New Partners and their Affiliates (as each
term is defined in the Omnibus Agreement) for Damages arising from its bad
faith, gross negligence or willful misconduct.
7. Notices. Any notice, request, demand or other communications
-------
required or permitted to be given under this Agreement shall be in writing and
shall be effective and deemed to have been duly given when delivered personally
or on the earlier to occurs of (a) the date of delivery as shown by the return
receipt; (b) two (2) days after the mailing thereof by registered or certified
mail, return receipt requested, with first class postage prepaid; (c)
confirmation of receipt of telecopy; or (d) the day after shipment by a
nationally recognized overnight delivery service. All notices shall be
addressed to the person at the addresses set forth on the signature page hereto.
Any party hereto may at any time and from time to time change its address for
purpose of receiving notices by giving notice thereof to the other party as
provided in this Section 7. Any notice which is required to be made within a
stated period of time shall be deemed timely if made before midnight of the last
day of such period.
8. Binding Agreement; Benefit. This Agreement shall bind and inure
--------------------------
to the benefit of any heirs or legal representatives of the Consultant and the
Company.
9. Governing Law. This Agreement shall be subject to and governed
-------------
by the laws of the State of Delaware regardless of applicable conflict of laws
rules or principles or the fact that either or both of the parties now is or may
become a resident of a different state or country.
10. Headings. Section headings are used for convenience only and
--------
shall in no way affect the construction of this Agreement.
11. Entire Agreement; Additional Agreements; Amendments. This
---------------------------------------------------
Agreement contains the entire understanding of the parties with respect to its
subject matter; provided, however, that nothing contained herein shall be
-------- -------
construed to prevent the Company from contracting with the Consultant for
additional services pursuant to other, separately documented agreements.
Neither this Agreement nor any part hereof may in any way be altered, amended,
extended,
-4-
<PAGE>
waived, discharged or terminated except by a written agreement signed by each of
the parties.
12. Successors and Assigns. The benefits of this Agreement shall
----------------------
inure to the respective successors and assigns of the parties hereto and of the
Indemnified Parties hereunder and their successors and assigns and
representatives, and the obligations and liabilities assumed hereunder by the
parties hereto shall be binding upon their respective successors and assigns.
Consultant may not assign its rights and obligations hereunder except to an
entity controlled by or under common control with Consultant.
13. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by each of the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
14. Termination. Notwithstanding any other provision of this
-----------
Agreement, the Company shall have the right to terminate this Agreement on
thirty (30) days prior written notice in the event that neither the Consultant
nor any of its affiliates owns any equity interest in the Company acquired by
them from Roadside, Inc. or Sequoia Ventures, Inc. or issued to them by the
Company or its successors in interest. For purposes hereof Petro Holdings GP
Corp. and Petro Holdings LP Corp. and their affiliates shall be deemed
affiliates of the Consultant. In the event of such a termination, the Company
shall not be obligated to pay any further Management Fee or Incentive Management
Fee or other payments hereunder to Consultant, other than any such fees or
payments accrued but unpaid prior to such termination and Consultant shall not
be required to return to the Company any fees previously paid.
15. Confidentiality. The Consultant shall maintain the
---------------
confidentiality of all proprietary information received by it in the course of
its engagement hereunder relating to the Company or its partners, and shall not
use the same for any purpose other than as contemplated herein.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Consulting
Agreement as of the date first above written.
PETRO STOPPING CENTERS, L.P.
By:/s/ J. A. Cardwell
--------------------------------
Name: J. A. Cardwell
------------------------------
Title: President
-----------------------------
Address: 6080 Surety Drive
---------------------------
El Paso, Texas 79905
-----------------------------------
-----------------------------------
CHARTWELL INVESTMENTS INC.
By:/s/ Todd Berman
--------------------------------
Name: Todd R. Berman
------------------------------
Title: President
-----------------------------
Address: 717 Fifth Avenue
---------------------------
23rd Floor
---------------------------
New York, New York 10022
---------------------------
---------------------------
-6-
<PAGE>
Exhibit 10.42
PRODUCT SERVICES AGREEMENT
THIS PRODUCT SERVICES AGREEMENT (the "Agreement") is made as of this 30th
day of January, 1997, by and among Petro Stopping Centers, L.P. ("Petro"), a
Delaware limited partnership, and C&R Distributing, Inc. ("C&R"), a Texas
corporation.
WHEREAS, Petro owns and operates full service truck/auto travel center
facilities known as Petro Stopping Center (the "Facilities") and buys and sells
petroleum products;
WHEREAS, C&R is in the business of hauling fuel, providing fuel dispensing
maintenance services, and buying and reselling petroleum products;
WHEREAS, Petro requires the services C&R provides for Petro's El Paso area
operations and from time to time buys and sells petroleum products to and from
C&R;
WHEREAS, Petro desires to engage C&R for C&R's products and services;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the receipt and sufficiency of which are hereby expressly
acknowledged, Petro and C&R hereby agree as follows:
1. DUTIES.
During the term hereof:
(a) C&R shall provide to Petro fuel hauling and fuel pump maintenance
services promptly after Petro shall from time to time request of C&R any of such
services within a fifty mile radius of Petro's headquarters building (the
"Territory"). The services to be provided by C&R shall be of a similar or better
quality as the same services provided by C&R to other parties in the Territory
and C&R shall charge Petro for such services C&R's lowest rates then charged by
C&R for similar services and such rates shall not exceed rates available from
other parties providing the same services of similar quality within the
Territory.
(b) The parties shall each promptly notify the other if either party has
petroleum products for sale, specifying the type, quality, quantity, price and
delivery terms. After such notification the party receiving such notice shall
have the right and option but not the obligation to purchase all or a portion of
such products and the offering party agrees to sell such products at prices
equal to or below the lowest prices such seller is charging and otherwise on at
least as favorable of terms as such seller is offering at that time to unrelated
parties in the Territory.
(c) This Agreement is non-exclusive and shall not require either party to
purchase any minimum amount of product or services from the other nor prevent
either party from dealing with and conducting business with any other persons in
competition with the parties hereto.
2. TERM. The terms of the Agreement shall extend until December 31, 2004,
unless sooner terminated pursuant to Section 6 below.
<PAGE>
3. PAYMENT TERMS. The fees and charges to be paid by C&R to Petro and the
fees and charges to be paid by Petro to C&R will be invoiced monthly within
twenty (20) days after the end of each month and paid within 10 days after
invoicing (the "due date"). In the event either party shall fail to pay to the
other party any sum required under this Agreement on or before the due date
thereof, the amount past due and owing to the other party shall bear interest at
the lesser of (a) the rate of one percent (1.0%) per month, (i.e. twelve percent
(12%) per annum) or (b) the maximum rate allowable by law. Interest shall accrue
from the due date until payment is received by the party owed the payment.
Acceptance by either party of any payments under this Agreement shall not
prevent such accepting party from disputing the amount owed or from demanding
more information from the paying party regarding payments finally due for a
period of two years following payment, and such acceptance of any payment by
either party shall not constitute a waiver of any breach of any term or
provision of this Agreement by the paying party if any such breach shall have
occurred.
4. MAINTENANCE AND AUDITS OF RECORDS. Each party shall keep such books and
records at its principal offices in the United States in accordance with United
States generally accepted accounting principles, consistently applied, and shall
maintain and make such books and records available for at least two (2) years
after the termination of this Agreement for possible inspection, copying,
extracting and/or audit by the other party. Each party or its duly authorized
agents or representatives shall have the right not more than once every six
calendar months to review and, through an independent certified public
accounting firm selected by the party conducting the audit and reasonably
acceptable to the other party, to conduct audits with respect to the books,
records, and all other documents and materials in the possession or under the
control of the other party relating to this Agreement. If the accounting firm
selected to conduct an audit is not reasonably acceptable to the other party,
then each party shall choose one accounting firm and such accounting firms shall
then choose a third independent certified public accounting firm, whose
determination as to all matters shall be final. Each party choosing an
accounting firm shall bear the costs of such accounting firm, and the cost of
the third accounting firm, if any, shall be borne by the party requesting such
audit, unless such audit reveals an overpayment in net amounts owed by the party
requesting the audit of at least $10,000, in which case the entire cost of the
audit shall be borne by the other party.
5. INSURANCE. C&R shall continually maintain general liability insurance
coverage with limits of at least $1 million for each occurrence with an
aggregate of $2 million and with a deductible of no more than $50,000 from an
insurance company licensed to do business in Texas which is financially sound
and reputable and which is reasonably acceptable to C&R. Should Petro elect to
provide the insurance coverage C&R is obligated to maintain hereunder, C&R shall
pay to Petro the premiums attributable to C&R's insurance for such period,
promptly upon receipt of written notification of such premiums. Each insurance
policy C&R is required to maintain hereunder shall name Petro, Petro PSC
Properties, L.P. as an additional insured and shall also require that Petro and
Petro PSC Properties, L.P. be given written notice at least thirty (30) days
prior to cancellation. On or before the thirtieth (30th) day prior to expiration
of its insurance policy C&R shall provide Petro with a certificate of insurance
certifying continual insurance coverage in accordance with this Section 5, and
if C&R shall fail to timely provide such a certificate of insurance, Petro may
obtain C&R's insurance and off-set Petro's costs and charges for such insurance
against the payments owed by Petro to C&R.
2
<PAGE>
6. TERMINATION. This Agreement may be terminated prior to the expiration of
its term by mutual written agreement of both parties hereto, or by either party
if the other party shall remain in material breach hereof for thirty (30) days
(ten (10) days if the default is a payment default) after the receipt of written
notice of such breach from the terminating party.
7. COVENANTS OF PARTIES.
(a) Each party hereby agrees to comply, and hereby represents and covenants
that it will conduct its activities and its operations in continuous compliance,
with all applicable local, state and federal laws, rules and regulations, and
that it will at all times conduct its activities under this Agreement in a
reasonable, safe and lawful manner.
(b) Each party hereby warrants and guarantees to the other party that the
services to be provided by the warranting party hereunder shall be of the
highest quality of workmanship then available in the Territory.
(c) Each party hereby warrants and guarantees to the other party that the
products each may sell to the other hereunder shall be of merchantable quality
and condition.
8. INDEMNIFICATION. C&R hereby agrees to indemnify, defend and hold harmless
Petro and Petro PSC Properties, L.P., a Delaware limited partnership, and their
respective directors, officers, shareholders, partners, agents, attorneys and
employees from and against any and all liabilities, claims, obligations,
demands, damages, fines, penalties, suits, judgments, costs and expenses,
whatsoever, including but not limited to court costs and reasonable attorneys'
fees, which Petro and/or such other indemnified parties may incur or which may
be asserted against any of them, and which arise or occur because of a breach by
C&R of its obligations under this Agreement and/or the negligence or willful
misconduct of C&R and its agents and employees.
Petro hereby agrees to indemnify, defend and hold harmless C&R and its
directors, officers, agents, shareholders, attorneys and employees from any and
all liabilities, claims, obligations, suits, demands, damages, fines, penalties,
judgments, costs and expenses whatsoever, including but not limited to court
costs and reasonable attorneys' fees, which C&R and/or such other indemnified
parties may incur or which may be asserted against any of them, and which arise
out of or occur because of a breach of Petro's obligations under this Agreement
and/or the negligence or willful misconduct of Petro and its agents and
employees.
9. NOTICES. Any and all notices or other communications required or permitted
to be given under any of the provisions of this Agreement shall be given in
writing and shall be deemed to have been duly given when personally delivered or
mailed by first class mail, certified, return receipt requested, postage prepaid
and addressed as follows, if mailed:
To Petro:
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attn: Evan C. Brudahl, Senior Vice President
3
<PAGE>
With a copy to:
Darrell R. Windham
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
To C&R:
C&R Distributing Company, Inc.
6080 Surety Drive
El Paso, Texas 79905
Attn: J.A. Cardwell, Jr., President
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement of Petro
and C&R regarding the subject matter addressed herein. This Agreement may not be
changed orally but only by an agreement in writing signed by each party hereto.
11. COUNTERPARTS. This Agreement may be executed in several counterparts each
of which shall be an original and all of which shall constitute but one and the
same document.
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF TEXAS.
13. JOINT PREPARATION. This Agreement shall be deemed to have been jointly
prepared, and no ambiguity herein shall be construed for or against any party
based upon the identity of the author of this Agreement or any portion hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
-----------------------------------------------
Larry Zine, Executive Vice President
C&R DISTRIBUTING COMPANY, INC.
By: /s/ J.A. Cardwell, Jr.
-----------------------------------------------
J.A. Cardwell, Jr., President
4
<PAGE>
Exhibit 10.43
PETRO/EL PASO AMUSEMENT SERVICES AGREEMENT
THIS PETRO/EL PASO AMUSEMENT SERVICES AGREEMENT (the "Agreement") is made
as of the 30th day of January, 1997, by and between Petro Stopping Centers,
L.P., a Delaware limited partnership ("Petro"), and El Paso Vending and
Amusement Company, a Texas general partnership ("EPAC").
RECITALS
--------
WHEREAS, Petro owns or leases and operates full service truck/auto travel
center facilities known as "Petro Stopping Centers" (the "Petro Business") the
location of which are more specifically described on the attached Exhibit "A"
(the "Facilities"), and Petro owns the real property and improvements comprising
the Facilities and leases them to Petro;
WHEREAS, the Facilities contain areas for amusements such as video and
electronic games for entertainment (the "Amusements" or "Amusement");
WHEREAS, EPAC is in the business of owning and providing such Amusements to
businesses;
WHEREAS, EPAC provides the Amusements and other services at each of the
Facilities pursuant to an amusement services agreement dated April 30, 1992;
WHEREAS, the April 30, 1992 amusement services agreement will expire on May
1, 1997, and Petro and EPAC desire to extend and amend such agreement whereby
EPAC will provide the Amusements for use at the Facilities and advise Petro as
to how to maximize revenues and goodwill from the location and mix of such
Amusements at the Facilities, and such other truck/auto travel center facilities
that Petro and EPAC may, from time to time, agree shall be included under the
terms of this Agreement (the "Additional Facilities"), and Petro will permit
EPAC to use the game rooms and surrounding areas at the Facilities designated by
Petro for such Amusements (the "Amusement Areas"), and further, will provide all
other services to EPAC described within this Agreement;
NOW, THEREFORE, Petro and EPAC hereby mutually agree to provide the
services and engage in the activities contemplated and described herein for
profit in accordance with the terms set forth below:
1. Services and Duties.
-------------------
1.1 EPAC's Duties. In consideration of the revenues to be received
-------------
by EPAC, as set forth in Section 2 below, EPAC shall assist and advise Petro as
to how to maximize revenues and goodwill from the location and mix of the
Amusements at the Facilities, and without further charge or payment by Petro and
Properties, EPAC shall provide the Amusements for use in the Amusement Areas of
the Facilities and Additional Facilities until the termination of this
Agreement. Subject to the terms of this Agreement, EPAC shall be responsible
for determining and shall make all decisions regarding, the type, mix, and
location of the Amusements within the Amusement Areas at the Facilities and
Additional Facilities.
1.2 Petro's Responsibilities. Petro shall provide locations for the
------------------------
Amusements within the Amusement Areas at each of the Facilities and Additional
Facilities, if any. Further, Petro shall be responsible for, and shall make all
decisions regarding, the books and records to be maintained and the collection
and remittance of revenues. Petro shall arrange for the connection of the
Amusements to Petro's power supply and shall permit EPAC to operate the
Amusements using Petro's power supply.
<PAGE>
Petro shall also supply heat, air-conditioning, water, janitorial and other
services as necessary for EPAC's operation of the Amusements.
1.3 Changes in Responsibilities. Any responsibilities or services to
---------------------------
be provided by a party hereunder may be assumed or delegated to another party
hereunder or third party pursuant to the mutual written agreement of Petro and
EPAC from time to time.
2. Division, Collection, and Remittance of Revenues.
------------------------------------------------
2.1 Division of Revenues. During the term of this Agreement, except
--------------------
as may otherwise be required by applicable law, Petro shall distribute to EPAC
for its services as described above fifty percent (50%) of the total gross
revenues from the Amusements provided by EPAC at the Facilities (and at such
other Additional Facilities to which services are rendered by EPAC) (the
"Amusements Revenues"), and, Petro shall retain for itself for the services it
provides and the use of the Amusement Areas the remaining fifty percent (50%) of
the Amusement Revenues.
2.2 Collection of Revenues. EPAC and Petro shall, on a weekly basis,
----------------------
collect the Amusement Revenues from those Amusements located at the Facilities
and Additional Facilities to which Petro shall provide EPAC with continual
access, and Petro shall retain such weekly collected receipts until it remits
them in accordance with Section 2.4 below. EPAC shall not be obligated to
collect Amusement Revenues from any Amusement if, at any time during the term of
this Agreement, the lock or security code is changed and EPAC is unable to then
have access to such Amusement, and Petro shall use all commercially reasonable
efforts to provide EPAC with access thereto as promptly as practicable after any
such change of a lock or security code or other restriction to EPAC's access to
any such Amusement. Petro shall immediately report to EPAC any Amusement
Revenues collected or received by Petro other than in connection with the
procedure described in this Section 2.2.
2.3 Risk of Noncollectability. Petro shall bear the risk of
-------------------------
noncollectability of any of the Amusement Revenues through EPAC's inability to
access any Amusement. Petro shall bear the risk as to its fifty percent (50%)
and EPAC as to its fifty percent (50%) of noncollectability as the result of
theft, casualty or other loss resulting from events beyond the control of either
party.
2.4 Remittance. EPAC shall keep complete and accurate records of the
----------
Amusement Revenues collected hereunder. Petro shall remit to EPAC an amount
equal to fifty percent (50%) of the Amusement Revenues collected during any
monthly period under this Agreement on the fifteenth (15th) day of the month
following the end of the month of collection or receipt by Petro. All amounts
shall be remitted by a check drawn on a United States bank, or by bank wire
transfer. At the time of each payment, Petro shall provide to EPAC a written
accounting of such payment, setting forth in detail the source of such Amusement
Revenues and each Facility and/or Additional Facility from which such Amusement
Revenues were collected. Subject to the provisions of Section 4.3, in the event
either party shall fail to pay the other any sum required under this Agreement
on or before the due date thereof, the amount past due shall bear interest at
the rate of one percent (1%) per month from the due date until paid. If this
rate exceeds the maximum interest rate allowable by law, then interest shall
accrue at the maximum rate allowable by law. Acceptance by either party of any
payments under this Agreement shall not prevent such party from disputing the
amount owed or from demanding more information from the other party regarding
payments finally due at a later date, and such acceptance of any payment by a
party shall not constitute a waiver of any breach of any term or provision of
this Agreement by the other party. Either party may offset any amounts due from
the other hereunder from the Amusement Revenues collected and owed hereunder.
2
<PAGE>
3. Title to Amusements. Legal title to the Amusements shall at all times
-------------------
during the term of this Agreement remain in and with EPAC, and EPAC shall be
treated as the owner of the Amusements for all purposes, including for Federal,
state and local income tax purposes.
4. Books and Records; Right to Audit.
---------------------------------
4.1 Books and Records. EPAC, at its sole cost and expense, shall
-----------------
keep complete and accurate books and records of all Amusement Revenues collected
and distributed by it under this Agreement and of all other transactions
relating to the activities of the parties under this Agreement. EPAC shall make
such books and records readily available to Petro, its agents or
representatives, at such reasonable times during normal business hours as Petro
may from time to time reasonably request for inspection, copying and extracting.
EPAC shall keep such books and records at its principal offices in the United
States in accordance with United States generally accepted accounting
principles, consistently applied and EPAC shall retain and keep such books and
records available for five (5) years after the termination of this Agreement for
possible inspection, copying, extracting and/or audit by Petro; provided,
however, that if EPAC wishes to dispose of such books and records at an earlier
date, it may do so if it first provides Petro with a sixty (60) day period
within which to review, retrieve and/or copy any such books and records, at
Petro's expense.
4.2 Right to Audit. At any time during the term of this Agreement
--------------
and for a period of ninety (90) days after the expiration and termination of
this Agreement, either party shall be entitled to an audit of those books and
records of the other party relating to the Amusement Revenues collected and/or
remitted hereunder. Such audit may be conducted by Petro, its employees,
representatives or agents at Petro's sole cost and expense; provided, however,
that if the Amusement Revenues are discovered to have been in excess of ten
percent (10%) of the amounts delivered by EPAC for periods ending before the
commencement of the audit, EPAC shall bear the costs of the audit. Such audit
shall be limited to the determination of the Amusement Revenues and shall be
conducted during normal business hours at EPAC's principal place of business.
4.3 Adjustments. If it is determined as a result of such audit that
-----------
there has been a deficiency in Amusement Revenues paid and reported by EPAC,
then such deficiency shall become immediately due and payable to Petro with
interest thereon at a rate of one percent (1%) per month from the date upon
which it is determined that an underpayment has been made until paid. If this
rate exceeds the maximum interest rate allowable by law, then interest shall
accrue at the maximum rate allowable by law. If it is determined as a result of
such audit that there has been an overpayment of the Amusement revenues by EPAC
to Petro, then EPAC shall be entitled, within thirty (30) days after EPAC
delivers written demand therefor, to a refund from Petro of such overpayment
with interest thereon at a rate equal to the lesser of one percent (1%) per
month or the maximum interest rate allowable by law, in each case from the date
of such overpayment until the date of repayment by Petro.
5. Insurance. EPAC agrees that, at its sole cost and expense, it shall
---------
provide and maintain in force during the term of this Agreement and any
extension thereof, public liability insurance for the Amusements and for Petro,
adequate to protect against liability for damage claims through public use of or
arising out of accidents occurring in connection with Amusements, with limits of
at least One Million Dollars ($1,000,000) single limit (per occurrence)
liability coverage for both personal injury and property damage and Two Million
Dollars ($2,000,000) aggregate coverage per location and with a deductible of no
more than Five Thousand Dollars ($5,000) from an insurance company licensed to
do business in each state in which the Facilities are located, and which is
financially sound and reputable and which is reasonably acceptable to Petro.
Such insurance policy shall name Petro as an additional insured and shall also
require that Petro be given written notice thirty (30) days prior to
cancellation. Copies of the
3
<PAGE>
policies shall be delivered to Petro for safekeeping. EPAC agrees that, if such
insurance policies are not kept in force during the entire term of this
Agreement and any extension hereof, Petro may procure the necessary insurance,
pay the premium therefor, and that Petro may offset its costs and charges for
such premium against the Amusement Revenues due to EPAC hereunder.
6. Maintenance of Equipment; Rotation and Removal of Amusements; Service
---------------------------------------------------------------------
Personnel.
---------
6.1 Maintenance of Equipment. EPAC shall have the sole and exclusive
------------------------
responsibility and obligation at its sole cost and expense to maintain the
Amusements in good and proper working order and condition, and EPAC shall
immediately repair and/or replace Amusements upon telephonic or written notice
from Petro of problems with any of the Amusements. EPAC acknowledges and agrees
that great value is placed on the need to maintain the Amusements in good,
normal, and safe working order and condition, that the consuming public and the
industry now associates Petro Stopping Centers with products and services of
consistently high quality, and that the terms and conditions of this Agreement
are necessary and reasonable to assure the consuming public and the industry
that the Amusements will be maintained in the same consistently high quality as
other products and services sold and/or provided by Petro. Accordingly, Petro
may, in its reasonable discretion and after at least five (5) days have elapsed
after Petro has provided notice of a problem with any of the Amusements in
accordance with this Section 6.1, repair or replace any of the Amusements and
offset all sums expended by Petro therefor, and an amount equal to Petro's lost
revenues during the time any of the Amusements is not operating properly,
against amounts otherwise payable to EPAC. EPAC or its representatives may,
during all reasonable business hours and with reasonable prior notice to Petro,
enter the Facilities and/or Additional Facilities to repair or replace any of
the Amusements in disrepair.
6.2 Rotation and Removal of Amusements. EPAC shall have sole control
----------------------------------
over the selection and placement of Amusements at each of the Reserved
Facilities and Additional Facilities as required to meet the needs of the
Amusements customers of the Reserved Facilities and Additional Facilities. The
number, variety, rotation, and removal of the Amusements at each of the Reserved
Facilities and Additional Facilities shall be determined by EPAC, but shall be
consistent with industry standards and with the objective to maximize the
Amusements Revenues by providing high quality and appealing Amusements to the
customers of the Facilities and Additional Facilities.
6.3 Service Personnel. EPAC shall provide the necessary service
-----------------
personnel to perform the repairs, maintenance, rotation, and removal of the
Amusements and all other services required of EPAC under this Agreement. The
expenses of employing or contracting for such service personnel and employees,
as well as any associated travel expenses, shall be born by EPAC. Any
employees, contractors or service personnel employed or contracted by EPAC
shall, for all purposes, not be employees or contractors of Petro, including for
Federal, state and local employment tax, workers' compensation, employee
benefit, withholding tax, and employer/employee liability purposes.
7. Indemnification. EPAC hereby agrees to indemnify, defend, and hold
---------------
harmless Petro and its past, present, and future partners, Board of Control
members, directors, officers, agents, partners, representatives, attorneys and
employees and their respective successors and assigns from and against any and
all liabilities, claims, obligations, demands, suits, judgments, costs and
expenses, whatsoever, including but not limited to court costs and attorneys'
fees, which Petro and/or such other indemnified parties may incur or which may
be asserted against any of them, and which arise or occur in any way from, or
are in any way related to the Amusements and/or a breach by EPAC of its
obligations under this Agreement.
4
<PAGE>
Petro hereby agrees to indemnify, defend, and hold harmless EPAC, and its
past, present, and future directors, officers, shareholders, agents, partners,
representatives, attorneys and employees and their respective successors and
assigns from and against any and all liabilities, claims, obligations, suits,
demands, judgments, costs and expenses whatsoever, including but not limited to
court costs and attorneys' fees, which EPAC and/or such other indemnified
parties may incur or which may be asserted against any of them, and which arise
out of or occur primarily because of an intentional or negligent breach of
Petro's obligations under this Agreement.
8. Assignments and Transfers. During the term of this Agreement, neither
-------------------------
EPAC nor Petro may assign or transfer its rights and interest in this Agreement
without the prior written consent of the other party which shall not be
unreasonably withheld. Any transfer or assignment of any party's interest under
this Agreement or its profits shall be subject to the rights and obligations
provided in this Agreement. No transfer or assignment shall relieve any party
of such party's duties or obligations under this Agreement except with the
express prior written consent of the other party.
9. Compliance with Local Laws. EPAC hereby agrees to comply, and EPAC
--------------------------
represents and covenants that the Amusements and the normal operation of the
Amusements currently comply and will during the term of this Agreement
continuously comply, with all applicable local, state and federal laws, rules
and regulations, and EPAC will at all times conduct its activities under this
Agreement in a reasonable, safe and lawful manner. EPAC shall pay the expense
of ensuring such compliance.
10. Additional Facilities. As Petro begins operating additional
---------------------
truck/auto travel center facilities or terminates arrangements with other
providers of Amusements as to existing truck/auto travel center facilities which
it operates (previously defined and referenced herein as the "Additional
Facilities"), Petro shall, at least sixty (60) days prior to the termination of
such arrangements or the commencement of operations at such Additional
Facilities, provide notice to EPAC of such Additional Facilities, and EPAC shall
notify Petro if EPAC wishes to provide Amusements to such Additional Facilities
upon the terms set forth in this Agreement by giving written notice to Petro
within thirty (30) days following receipt of notice from Petro. Petro shall
within ten (10) days thereafter notify EPAC if Petro agrees to permit EPAC to
provide Amusements at such facilities, and, if Petro agrees to permit EPAC to
provide Amusements to any such Additional Facilities, the terms of this
Agreement shall apply to the Additional Facilities, except to the extent Petro
and EPAC agree otherwise in writing, and such Additional Facilities will be
added to the attached Exhibit A and incorporated herein for all purposes.
11. Termination. Unless extended by mutual agreement of the parties, this
-----------
Agreement shall terminate upon the earlier of:
(i) May 1, 2002; or
(ii) If any party remains in material breach for thirty (30) days (ten
(10) days if the default is a payment default) after receipt of written notice
from the non-defaulting party of such breach (and describing such breach with
reasonable detail).
EPAC shall remove the Amusements from the Facilities and Additional
Facilities within fifteen days after the termination of this Agreement. The
removal of the Amusements by EPAC shall be done as expeditiously and with as
little disruption as reasonably possible to allow substitute Amusements to be
located within the Amusement Areas at the Facilities and Additional Facilities
to provide Amusement services to Petro's customers on a continuous and
uninterrupted basis.
5
<PAGE>
12. Tax Matters. This Agreement is not intended by the parties and it is
-----------
specifically agreed that the parties are not creating a partnership or joint
venture for any purpose, whether under federal, state or local law, including,
but not limited to for purposes of the application of Subchapter K of Chapter 1
of Subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), or
any similar state statute. This Agreement is for the purpose of evidencing the
services that each party will provide to the other and the obligations of each
party in connection with such services to be rendered. Each party shall be
responsible for the proper and timely payment of any Federal, state, and local
taxes attributable to its share of the Amusement Revenues.
13. Access by EPAC; Inspection by Petro.
-----------------------------------
13.1 Access. Petro agrees to provide EPAC, its agents and employees
------
reasonable access to the Facilities or Additional Facilities consistent with
past practices. Petro shall permit the placement of such equipment or devices
as are reasonably necessary for EPAC to provide the services required hereunder
and for the purpose of maintaining, repairing or replacing such equipment and
devices consistent with past practices, provided that EPAC's activities shall
not unreasonably interfere with the operations and activities of Petro in the
Facilities and Additional Facilities.
13.2 Petro's Right To Inspect, Repair, and Maintain Premises. Petro
-------------------------------------------------------
reserves the right to enter the Amusement Areas at reasonable times to inspect
them, to perform, maintenance and repair required of Petro, or to make additions
or alterations to any part of the Facilities in which the Amusement Areas are
located, and EPAC agrees to permit Petro to do so. Petro may, in connection
with such alterations, additions, or repairs, erect scaffolding, fences, and
similar structures, post relevant notices, and place moveable equipment without
incurring liability to EPAC for loss of Amusement Revenues. Petro shall use
reasonable efforts to minimize its interference with the use of the Amusement
Areas and the Amusements located therein by the customers of Petro.
14. Notices. Any and all notices or other communications required or
-------
permitted to be given under any of the provisions of this Agreement shall be
given in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class mail, certified, return receipt requested,
postage prepaid and addressed as follows, if mailed:
To Petro:
---------
Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attn: Evan C. Brudahl, Senior Vice President
With a copy to:
Darrell R. Windham
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
6
<PAGE>
To EPAC:
--------
El Paso Vending and Amusement Company
3630 Buckner
El Paso, Texas 79925
Attn: Gary Dodson, General Manager
With a copy to:
J.A. Cardwell, Sr.
6080 Surety Drive
El Paso, Texas 79905
Any party may change its address and/or the party to whom the notice
is to be sent by giving notice to all other parties hereto in accordance with
this Section 14.
15. Entire Agreement. This Agreement contains the entire agreement of the
----------------
parties hereto regarding the subject matter addressed herein. This Agreement
may not be changed or amended orally but only by an agreement in writing signed
by each party hereto.
16. Counterparts. This Agreement may be executed in several counterparts
------------
each of which shall be an original and all of which shall constitute but one and
the same document.
17. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
--------------
ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF TEXAS.
18. Joint Preparation. This Agreement shall be deemed to have been
-----------------
jointly prepared, and no ambiguity herein shall be construed for or against any
party based upon the identity of the author of this Agreement or any portion
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
------------------------------------------------
Larry Zine, Executive Vice President
EL PASO VENDING AND AMUSEMENT COMPANY
By: /s/ J.A. Cardwell
-----------------------------------------------
J.A. Cardwell, President
7
<PAGE>
EXHIBIT 10.44
MOTOR MEDIA, INC.
6080 SURETY DRIVE * EL PASO, TEXAS 79905
DISPLAY SPACE AGREEMENT * TRUCK STOPS
THIS AGREEMENT is made this 30th day of January, 1997, by and between Petro
Stopping Centers, L.P., a Delaware limited partnership, an operator and/or owner
of certain truck stops (the "Truck Stops") known as Petro Stopping Centers
(hereinafter referred to as the "LESSOR"), and MOTOR MEDIA, INC., a Texas
corporation, of 6080 Surety Drive, El Paso, Texas 79905 (hereinafter referred to
as "Motor Media" or the "LESSEE").
LEASE AND INSTALLATION
The LESSOR hereby leases exclusively to the LESSEE, for advertising use the
areas of the LESSOR's Truck Stops as are described on Exhibit A for LESSEE's
installation of Truck Stop advertising displays consistent with past practices
or as otherwise may be approved by LESSOR, which approval shall not be
unreasonably withheld or delayed. LESSEE shall have quiet enjoyment of the
described areas during the term hereof.
RENT
For and in consideration of this lease the LESSEE shall have the exclusive right
and option to install and maintain at LESSEE's sole cost advertising display
faces at the Truck Stops for the LESSOR. The LESSEE shall also pay to LESSOR
25% of the gross advertising revenue received by the LESSEE from advertisers
using the display faces at the Truck Stops. All such sums shall be payable
quarterly, within 10 days of the end of each three month period. The LESSEE
intends to install sufficient quantities of displays, from time to time,
throughout the LESSOR's Truck Stops to meet the needs of the business
advertisers. The LESSEE reserves the right to remove any display if the
advertising revenue is insufficient to warrant the continued costs of
maintenance of such display. Any such installations and removals are to be done
at the sole expense of the LESSEE.
TERM
The term of this lease shall commence on the date of this Agreement (the
"Commencement Date") and shall continue until April 30, 2002. After such term,
the lease shall continue until canceled by either party by giving 60 days prior
written notice to the other party. Upon such termination, the LESSEE will
remove all of its displays and other property from the LESSOR's premises within
60 days.
The provisions on pages 2 and 3 are hereby incorporated for all purposes and
constitute an integral part of this Agreement.
JAMES A. CARDWELL, JR. (915) 779-4711
- ------------------------------------ -----------------------
LESSEE CONTACT PERSON Telephone Number
EVAN C. BRUDAHL (915) 779-4711
- ------------------------------------ -----------------------
LESSOR CONTACT PERSON Telephone Number
LESSOR: PETRO STOPPING CENTERS, L.P.
By: /s/ Larry J. Zine
------------------------------------
LARRY ZINE, Executive Vice President
LESSEE: MOTOR MEDIA, INC.
By: /s/ J.A. Cardwell, Jr.
------------------------------------
JAMES A. CARDWELL, JR., President
1
<PAGE>
USE OF PREMISES
The LESSOR grants to the LESSEE's exclusive right and permission to display
commercial, industrial, public service or charitable advertising on each of the
display faces in the Truck Stops, subject to the following conditions.
(a) No advertising is to include advertisements for illegal drugs or any
products which may not legally be sold within the municipality, county, or state
in which any of the LESSOR's Truck Stops are located, nor any advertisement
containing or depicting any matter which could be reasonably considered obscene,
immoral, or offensive to the majority or a substantial minority of the citizens
in the community, nor advertisements for any specific products which the LESSOR
has requested the LESSEE to refrain from advertising. In any dispute involving
this provision the LESSOR shall make the final decision or determination in its
reasonable discretion.
(b) The displays shall be kept in safe condition and in good order and repair,
with any damage to be repaired at the LESSEE's expense, except damage caused by
willful and negligent acts of the LESSOR or its partners, employees,
contractors, subcontractors or agents.
(c) The LESSEE will inspect and service the displays periodically and when
requested to do so by the LESSOR or by the respective advertisers. The LESSOR
will notify the LESSEE whenever any incident of damage or vandalism comes to the
LESSOR's attention, and the LESSEE agrees to promptly service the applicable
display as soon as practicable after receiving such notice.
(d) During such times as no revenue producing commercial or industrial
advertising is displayed on the various display faces, the LESSEE will install
and maintain interim use public service, charitable, self promotion or nonprofit
institutional display copy without charge or will install and maintain interim
use display copy of a generalized promotional nature of the LESSOR's facility
produced at the expense of the LESSOR, without charge for such use.
(e) All displays, directory faces, display faces, and other materials placed or
installed on or in the LESSOR's premises by the LESSEE are the LESSEE's trade
fixtures and equipment, and shall be and remain the LESSEE's trade fixtures and
equipment, and shall be and remain the LESSEE's property, and may be removed by
the LESSEE at any time prior to or within a reasonable time after the
termination of this lease or any extension thereof. The LESSOR agrees to allow
the LESSEE full access to the property occupied by such advertising display
faces for the purpose of installing, maintaining, changing or removing them
during normal Truck Stop hours at the expense of LESSEE, including expenses of
repairing damages resulting from removal.
(f) LESSOR shall not permit any obstruction (including, without limitation,
kiosks, booths, furniture, planters, decorations or any other obstruction) to be
placed within fifteen (15) feet of a Truck Stop advertising display.
LESSOR grants to LESSEE the exclusive right to provide static, back lighted
advertising in the common areas of the Truck Stops.
(g) Neither LESSOR nor LESSEE will relocate the Truck Stop advertising display
units after the locations have been agreed to on Exhibit A.
MAINTENANCE
The displays shall be substantially and safely constructed of standard building
materials and shall be designed and installed in compliance with all applicable
building codes. The displays shall be affixed to the wall with appropriate
installation hardware. Where appropriate, the displays will contain lighting
fixtures and apparatus for internal illumination with wiring connected to the
LESSOR's power supply which power shall be supplied to LESSEE without
interruption or charge. The LESSEE agrees to assist the LESSOR in the obtaining
of all necessary permits, licenses or authorizations for the installation,
maintenance or advertising use of the displays and the LESSEE will arrange for
the connection to the LESSOR's power supply. It is understood that the times of
lighting of each display will coincide with the times the LESSOR's Truck Stop is
open to the public.
HOLD HARMLESS
The LESSEE agrees to indemnify and hold harmless the LESSOR, the owner of the
Truck Stop and their respective directors, officers, shareholders, partners,
agents, attorneys and employees from any and all claims, damages, demands,
liabilities, costs and/or expenses, including reasonable attorneys' fees, on
account of bodily injury or physical property damage caused by or resulting from
the construction, maintenance, repair, change or removal of the LESSEE's
displays on the LESSOR's property, unless such claims or demands are caused by
or result from breach by LESSOR of this Agreement or the negligent or willful
act of LESSOR and/or its partners, employees, contractors, subcontractors or
agents. The LESSOR agrees to indemnify and hold harmless the LESSEE from any
and all claims, damages, demands, liabilities, costs and/or expenses, including
reasonable attorneys' fees, on account of bodily injury or physical property
damage caused by or resulting from any negligent or willful act of the LESSOR or
the LESSOR's partners, agents, employees, contractors and/or subcontractors.
REPRESENTATIONS AND WARRANTIES
Both persons signing this lease on behalf of the LESSOR and LESSEE represent and
warrant that they have full authority to enter into this agreement on behalf of
the party represented. Neither the LESSOR nor the LESSEE shall be bound by any
agreement or representation, express or implied, not contained herein. This
lease shall be deemed to have been accepted and its terms enforceable only upon
the execution hereof by both parties in the spaces provided.
2
<PAGE>
COLLECTION OF REVENUES AND PAYMENT OF FEES
At the time of each such payment of rent hereunder, LESSEE shall provide LESSOR
a written statement describing the calculation of the payment. In the event
LESSEE shall fail to pay to LESSOR any sum required under this Agreement on or
before the due date thereof, the amount past due and owing to LESSOR shall bear
interest from the due date until paid at the lesser of one percent (1.0%) per
month (i.e., twelve percent (12%) per annum), or the maximum interest rate
allowable by law. Acceptance by LESSOR of any payments under this Agreement
shall not prevent LESSOR from disputing the amount owed or from demanding more
information from LESSEE regarding payments finally due for a period of two years
following payment, and such acceptance of any payment by LESSOR shall not
constitute a waiver of any breach of any term or provision of this Agreement by
LESSEE if any such breach shall have occurred.
BOOKS AND RECORDS
LESSEE shall keep complete and accurate books and records of all revenues
received and distributed under this Agreement and of all transactions relating
to this Agreement. LESSEE shall make such books and records readily available
to LESSOR, its agents or representatives, at such reasonable times during normal
business hours as LESSOR may from time to time reasonably request for
inspection, copying and extracting. LESSEE shall keep such books and records at
its principal offices in the United States in accordance with United States
generally accepted accounting principles, consistently applied, and such books
and records shall be retained by LESSEE and kept available for at least two
years after the termination of this Agreement for possible inspection, copying,
extracting and/or audit. LESSOR or its duly authorized agents or
representatives shall have the right to review and, through an independent
certified public accounting firm selected by LESSOR and reasonably acceptable to
LESSEE, to conduct audits with respect to the books, records, and all other
documents and materials in the possession or under the control of LESSEE
relating to this Agreement. If the accounting firm selected to conduct an audit
is not reasonably acceptable to LESSEE, then each party shall choose one
accounting firm and such firms shall then choose a third independent certified
public accounting firm, whose determination as to all matters shall be final and
conclusive. Each party choosing an accounting firm shall bear the costs of such
accounting firm, and the cost of the third accounting firm if any, shall be
borne by the party requesting such audit, unless such audit reveals a total
underpayment to LESSOR of at least $10,000, in which case the costs of the audit
shall be borne by LESSEE.
INSURANCE
LESSEE shall provide general liability insurance of at least $1 million each
occurrence with an aggregate of $2 million and an annual deductible of no more
than $50,000 from an insurance company licensed to do business in Texas which is
financially sound and reputable and which is reasonably acceptable to LESSOR.
Such insurance policy shall name LESSOR and owners of the Truck Stop as
additional insureds and shall also require that LESSOR and owners be given
written notice thirty (30) days prior to cancellation. Should LESSEE not
provide LESSOR with a certificate of insurance certifying coverage in accordance
with this Section 4, LESSOR may obtain its own insurance and LESSEE shall
immediately pay to LESSOR the costs and charges for such insurance together with
interest thereon in accordance with Section 2 above from the date of LESSOR's
payment.
ASSIGNMENT
This Agreement may not be assigned by LESSEE without the prior written consent
of LESSOR, which consent may be withheld in the absolute discretion of LESSOR.
Any assignment in violation of this section shall be void and shall result in
the termination of this Agreement at the election of LESSOR, other than that
provisions "HOLD HARMLESS." Any sale, assignment or other transaction which
results in James A. Cardwell, Jr. holding less than 66% of the voting power of
LESSEE shall be deemed an assignment for purposes of this paragraph.
3
<PAGE>
EXHIBIT 10.45
SECOND AMENDED AND RESTATED INDEMNITY AND
-----------------------------------------
HOLD HARMLESS AGREEMENT
-----------------------
J. A. CARDWELL, SR. - INDEMNITOR
--------------------------------
This Second Amended and Restated Indemnity and Hold Harmless Agreement (the
"Agreement") is entered into on this 30th day of January, 1997 by J.A. Cardwell,
Sr. ("Indemnitor") as an amendment and restatement and continuation in its
amended and restated form of the certain Amended and Restated Indemnity and Hold
Harmless Agreement dated the 24th day of May, 1994 by J. A. Cardwell, Sr., which
was an amendment and restatement and continuation in its amended and restated
form of that certain Indemnity and Hold Harmless Agreement dated May 1, 1992
(collectively the "Previous Indemnity and Hold Harmless Agreements") for the
benefit of Petro Stopping Centers, L.P., a Delaware limited partnership (the
"Partnership"), Petro Holdings G.P. Corp., a Delaware corporation ("Petro
Holdings") in its capacity as a general partner of the Partnership, Petro, Inc.,
a Texas corporation ("Petro"), in its capacity as a general partner of the
Partnership and Petro Financial Corporation, a Delaware corporation and wholly
owned subsidiary of the Partnership ("Petro Financial"), as obligors and/or
guarantors of certain indebtedness of the Partnership and Petro PSC, with
respect to certain obligations of indebtedness which are more specifically
defined below as either the "Obligations," or "1997 Debt Obligations."
RECITALS
--------
Indemnitor was a party to that certain Participation Agreement (the
"Participation Agreement"), dated May 1, 1992 and that certain Amended and
Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the
"Partnership Agreement"), dated May 1, 1992. Pursuant to the Participation
Agreement and the Partnership Agreement, Indemnitor agreed to contribute and
conveyed to the Partnership all of those rights and assets more specifically
described in exhibits to the Participation Agreement, subject to such
obligations and indebtedness as the parties to the Partnership Agreement
expressly agreed that the Partnership would assume as set forth in exhibits to
the Participation Agreement and the Partnership Agreement.
Upon the formation of the Partnership and due to certain obligations of
indebtedness more specifically described in Exhibit "A" attached to each of the
Previous Indemnity and Hold Harmless Agreements and made a part thereof for all
purposes (the "Obligations") constituting recourse and nonrecourse debt for
which the Partnership, Roadside, Inc., a Delaware corporation ("Roadside")
(which up until and including the date of this Agreement was a general partner
of the Partnership), Petro and Petro Financial would have been liable, and but
for the operation of the Previous Indemnity and Hold Harmless Agreements, the
Partnership, Roadside, Petro and Petro Financial would have borne the economic
risk of loss for the Obligations for purposes of Section 752 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulations (S) 1.752-2 (the
"Economic Risk of Loss"). As a consequence, but for the operation of the
Previous Indemnity and Hold Harmless Agreements, the Partnership, Roadside,
Petro and Petro Financial would have been allocated all of the Obligations for
purposes of Section 752 of the Code and Treasury Regulation (S) 1.752-2.
<PAGE>
To ensure that Indemnitor would be liable for a specific dollar amount of
the Obligations or such greater or lesser amount as specified in paragraph 1.2
of each of the Previous Indemnity and Hold Harmless Agreements, (the "Old
Indemnified Amount") and bear the Economic Risk of Loss with respect to the Old
Indemnified Amount, it was necessary that Indemnitor, under certain
circumstances pursuant to the terms of the Previous Indemnity and Hold Harmless
Agreements, have the sole liability to pay an amount equal to the Old
Indemnified Amount in connection with the Obligations. Accordingly, for
purposes of ensuring that Indemnitor bore the Economic Risk of Loss as to the
Old Indemnified Amount and that an amount equal to the Old Indemnified Amount of
the Obligations would be allocated to Indemnitor for purposes of Section 752 of
the Code and Treasury Regulation (S) 1.752-2, Indemnitor entered into the
Previous Indemnity and Hold Harmless Agreements for the benefit of the
Partnership, Roadside, Petro, Petro Financial and other parties.
Pursuant to an offering of high yield debt in the amount of $135 million by
the Partnership and Petro Financial, which is unsecured and in registered and
negotiable form, and a new $115 million credit agreement with The First National
Bank of Boston (with the foregoing $135 million high yield debt offering and new
credit agreement more specifically described in the attached Exhibit "A" and
hereinafter referred to as the "1997 Debt Obligations") the debt represented by
the Obligations will be refinanced and repaid; and to evidence the continuing
intent and legal obligation to continue the terms and provisions of the Previous
Indemnity and Hold Harmless Agreements with respect to the 1997 Debt
Obligations, as amended hereunder, Indemnitor is entering into this Agreement.
INDEMNITY
---------
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, including, but not limited to, the events which were attendant to
the formation and operation of the Partnership and the creation and issuance of
the 1997 Debt Obligations, the parties agree as follows:
1. INDEMNIFICATION PROVISIONS
--------------------------
1.1 Indemnitor shall indemnify and hold harmless the Partnership, Petro
Holdings, Petro and Petro Financial, and their respective legal representatives,
successors, assigns, subsidiaries and past and present officers, directors,
agents and employees, (collectively, the "Indemnified Parties") from and against
any and all claims, causes of action, liabilities, obligations, losses, costs,
damages and expenses (including reasonable attorneys' fees) suffered or incurred
by any of the Indemnified Parties, of whatever kind, nature or character,
whether arising before or after the date of this Agreement, and whether known or
unknown, liquidated or unliquidated, fixed or contingent, arising from any loan,
assumption, guaranty or other agreement executed by any Indemnified Party or by
reason of operation of law, in connection with the 1997 Debt Obligations and the
liabilities thereunder, including, but not limited to, the liability of any
Indemnified Party who may be a subrogee with respect to the 1997 Debt
Obligations (the "Indemnified Claims"), in an amount equal to $41,600,000, or
such greater or lesser amount, as specified in paragraph 1.2, below (with the
foregoing amount hereinafter referred to as the "Indemnified Amount"); provided,
however, the indemnity and hold harmless provided hereunder shall not relieve
the Indemnified Parties from making regular interest and
2
<PAGE>
principal payments on and otherwise satisfying all obligations with respect to
the 1997 Debt Obligations until (i) an Event of Default or Default (as defined
in the instruments giving rise to and governing the repayment of the 1997 Debt
Obligations) has occurred in connection with one or more of the 1997 Debt
Obligations which remains uncured and/or is not otherwise waived, (ii) all
amounts owing on the 1997 Debt Obligations in default become immediately due and
payable, and (iii) all real and personal property, if any, liable for or
securing the 1997 Debt Obligations in default has been exhausted or otherwise
disposed of to satisfy the 1997 Debt Obligations. The Indemnified Amount
payable hereunder shall be paid to the Indemnified Parties proportionately based
on the Indemnified Claims incurred by each of the Indemnified Parties over the
total Indemnified Claims incurred by all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount
which Indemnitor shall be required to indemnify and hold harmless the
Indemnified Parties in the manner specified in paragraph 1.1, above, with
respect to the 1997 Debt Obligations shall be no less nor more than the amount
necessary to cause Indemnitor's adjusted tax basis in his interest in the
Partnership pursuant to Subchapter K of Chapter 1 of Subtitle A of the Code at
all times to equal no less than a minimum of One Dollar ($1.00), determined
after (i) taking into account all adjustments to Indemnitor's tax basis in his
interest in the Partnership resulting from Partnership operations, including,
but not limited to, the allocation to Indemnitor of his proportionate share of
income, gains, deductions, losses, credits and all other tax attributes pursuant
to the terms of the Partnership Agreement, (ii) allocating any and all
Nonrecourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-3 and 1.752-4, and (iii) allocating any and all
Recourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-2 and 1.752-4, and after giving effect to the
terms and provisions of this Agreement and its effect on the obligations of
Indemnitor with respect to such Recourse Debt.
1.3 For purposes of this Agreement, the terms "Recourse Debt" and
"Nonrecourse Debt" shall have the meanings assigned to such terms pursuant to
Treasury Regulation (S) 1.752-1(a), and the term "Partner" shall have the
meaning assigned to such term in the Partnership Agreement. Likewise, the terms
"Default" and "Event of Default" shall have the meanings assigned to such terms
in the Indenture dated January 29, 1997 from the Partnership and Petro Financial
to State Street Bank and Trust Company, Boston, Massachusetts, Trustee, relating
to the 1997 Debt Obligations.
1.4 In interpreting and applying the provisions of paragraphs 1.1 and 1.2
of this Agreement, it is hereby specifically agreed by the parties hereto that
the intent of the parties in entering into this Agreement is to subject
Indemnitor to the Economic Risk of Loss for all matters related to the 1997 Debt
Obligations in an amount sufficient for Indemnitor to avoid receiving a
distribution pursuant to Section 752(b) of the Code and the Treasury Regulations
promulgated thereunder to cause Indemnitor to recognize gain pursuant to Section
731(a) of the Code, by Indemnitor receiving the equivalent of a money
distribution which exceeds Indemnitor's adjusted tax basis in his Partnership
interest immediately before such distribution. To that end, this Agreement
shall be interpreted to subject Indemnitor to the Economic Risk of
3
<PAGE>
Loss with respect to the Indemnified Amount and the 1997 Debt Obligations, as
provided in Treasury Regulation (S) 1.752-2, in an amount sufficient to cause
Indemnitor's adjusted tax basis in his interest in the Partnership at all times
to equal no less than a minimum of One Dollar ($1.00).
2. BINDING EFFECT OF AGREEMENT
---------------------------
This Agreement shall be binding upon Indemnitor and his legal
representatives, successors and assigns, and shall be binding upon and inure to
the benefit of the Indemnified Parties and their representatives, successors and
assigns. The indemnities, obligations and agreements of Indemnitor provided for
in this Agreement shall continue in full force and effect until Indemnitor
ceases to be a Partner in the Partnership (unless the Partnership agrees in
writing that the terms of this Agreement shall continue in force with respect to
Indemnitor as a non-Partner of the Partnership), until the liabilities and
obligations of the Indemnified Parties with respect to the 1997 Debt Obligations
and any succeeding indebtedness have terminated or are otherwise barred by
operation of law, or this Agreement is terminated by the mutual written
agreement of Indemnitor and the Indemnified Parties.
3. NO SET-OFF
----------
3.1 No payment required to be made by Indemnitor pursuant to this
Agreement for the benefit of the Indemnified Parties shall be subject to any
right of set-off, contribution, reimbursement, subrogation, counterclaim,
defense, abatement, suspension, deferment or reduction, and Indemnitor shall not
have any right to be released, relieved, or discharged from any obligation or
liability under this Agreement for any reason whatsoever except as expressly
provided herein.
3.2 Notwithstanding the provisions of Section 3.1 above, to the extent
that other current or former Partners in the Partnership enter into Second
Amended and Restated Indemnity and Hold Harmless Agreements or Indemnity and
Hold Harmless Agreements similar in terms and effect to this Agreement
(collectively the "All Existing Indemnity and Hold Harmless Agreements") and the
actual liability hereunder and under such other similar agreements with respect
to the 1997 Debt Obligations is less than the aggregate indemnity obligations of
all such current and former Partners under the terms of such agreements
(including, without limitation, this Agreement), the aggregate liabilities under
the 1997 Debt Obligations shall be borne proportionately by such former and
current Partners determined as follows for each such current and former Partner,
including Indemnitor: (i) the percentage derived by dividing (a) a numerator
consisting of the maximum liability of each former or current Partner under his
Indemnity and Hold Harmless Agreement (whether amended or restated or otherwise)
by (b) a denominator consisting of the total of all such maximum liabilities of
each such former or current Partners under All Existing Amended and Restated
Indemnity and Hold Harmless Agreements, multiplied by (ii) the total of all such
liabilities of each such former or current Partners under All Existing Indemnity
and Hold Harmless Agreements.
4
<PAGE>
4. NOTICE
------
Any Indemnified Party hereunder who wishes to enforce the terms and
conditions of this Agreement against Indemnitor shall provide written notice to
Indemnitor of such intention. Any written notice may be given by an Indemnified
Party and shall be delivered to Indemnitor by mailing the same by United States
mail, postage prepaid, or by courier or facsimile transmission, or by delivery
in person, addressed or delivered as follows:
ATTN: J. A. Cardwell, Sr.
c/o Petro, Inc.
6080 Surety Drive
El Paso, Texas 79905
With a copy to:
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
ATTN: Mr. Roger D. Aksamit
5. SEVERABILITY
------------
This Agreement is severable, and if for any reason any provision or
provisions are determined to be invalid, inoperative, or contrary to any
existing or future law, the remainder of this Agreement shall be considered
valid and operative and effect shall be given to the intent manifested by the
portion held invalid or inoperative.
6. TERMINATION, AMENDMENT, MODIFICATION AND SUPPLEMENTATION
--------------------------------------------------------
This Agreement may be terminated, amended, modified or supplemented only by
the mutual written agreement of Indemnitor and the Indemnified Parties.
7. COUNTERPARTS
------------
This Agreement may be executed by the parties in any number of identical
counterparts, all of which together shall constitute a single binding agreement
between the parties. It shall not be necessary for any particular party to
execute the same counterpart for the various counterparts hereunder to
constitute a binding agreement.
8. GOVERNING LAW
-------------
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE
OF TEXAS.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective from the date first written above.
INDEMNITOR
/s/ J. A. Cardwell
---------------------------------------------
J. A. Cardwell, Sr.
AGREEMENT AND CONSENT
---------------------
Petro Stopping Centers, L.P., Petro Holdings G.P. Corp., Petro Financial
Corporation and Petro, Inc. on behalf of themselves and their respective legal
representatives, successors, assigns, subsidiaries and past and present
officers, directors, agents and employees, as the Indemnified Parties under the
Amended and Restated Indemnity and Hold Harmless Agreement dated May 24, 1994,
which is amended and restated hereunder, hereby consent and agree to the various
amendments made hereunder to the Amended and Restated Indemnity and Hold
Harmless Agreement dated May 24, 1994.
PETRO STOPPING CENTERS, L.P., a
Delaware limited partnership
By: PETRO, INC., a Texas corporation,
General Partner
By: /s/ J. A. Cardwell
------------------------------------------
Authorized Officer
PETRO HOLDINGS G.P. CORP., a Delaware
corporation
By: /s/ Michael Shein
------------------------------------------
Authorized Officer
6
<PAGE>
PETRO FINANCIAL CORPORATION, a Delaware
corporation
By: /s/ Larry J. Zine
-----------------------------------------------
Authorized Officer
PETRO, INC., a Texas corporation
By: /s/ J. A. Cardwell
-----------------------------------------------
Authorized Officer
7
<PAGE>
Exhibit 10.46
SECOND AMENDED AND RESTATED INDEMNITY AND
-----------------------------------------
HOLD HARMLESS AGREEMENT
-----------------------
J. A. CARDWELL, JR. - INDEMNITOR
--------------------------------
This Second Amended and Restated Indemnity and Hold Harmless Agreement (the
"Agreement") is entered into on this 30th day of January, 1997 by J.A. Cardwell,
Jr. ("Indemnitor") as an amendment and restatement and continuation in its
amended and restated form of the certain Amended and Restated Indemnity and Hold
Harmless Agreement dated the 24th day of May, 1994 by J. A. Cardwell, Jr., which
was an amendment and restatement and continuation in its amended and restated
form of that certain Indemnity and Hold Harmless Agreement dated May 1, 1992
(collectively the "Previous Indemnity and Hold Harmless Agreements") for the
benefit of Petro Stopping Centers, L.P., a Delaware limited partnership (the
"Partnership"), Petro Holdings G.P. Corp., a Delaware corporation ("Petro
Holdings") in its capacity as a general partner of the Partnership, Petro, Inc.,
a Texas corporation ("Petro"), in its capacity as a general partner of the
Partnership and Petro Financial Corporation, a Delaware corporation and wholly
owned subsidiary of the Partnership ("Petro Financial"), as obligors and/or
guarantors of certain indebtedness of the Partnership and Petro PSC, with
respect to certain obligations of indebtedness which are more specifically
defined below as either the "Obligations," or "1997 Debt Obligations."
RECITALS
--------
Indemnitor was a party to that certain Participation Agreement (the
"Participation Agreement"), dated May 1, 1992 and that certain Amended and
Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the
"Partnership Agreement"), dated May 1, 1992. Pursuant to the Participation
Agreement and the Partnership Agreement, Indemnitor agreed to contribute and
conveyed to the Partnership all of those rights and assets more specifically
described in exhibits to the Participation Agreement, subject to such
obligations and indebtedness as the parties to the Partnership Agreement
expressly agreed that the Partnership would assume as set forth in exhibits to
the Participation Agreement and the Partnership Agreement.
Upon the formation of the Partnership and due to certain obligations of
indebtedness more specifically described in Exhibit "A" attached to each of the
Previous Indemnity and Hold Harmless Agreements and made a part thereof for all
purposes (the "Obligations") constituting recourse and nonrecourse debt for
which the Partnership, Roadside, Inc., a Delaware corporation ("Roadside")
(which up until and including the date of this Agreement was a general partner
of the Partnership), Petro and Petro Financial would have been liable, and but
for the operation of the Previous Indemnity and Hold Harmless Agreements, the
Partnership, Roadside, Petro and Petro Financial would have borne the economic
risk of loss for the Obligations for purposes of Section 752 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulations (S) 1.752-2 (the
"Economic Risk of Loss"). As a consequence, but for the operation of the
Previous Indemnity and Hold Harmless Agreements, the Partnership, Roadside,
Petro and Petro Financial would have been allocated all of the Obligations for
purposes of Section 752 of the Code and Treasury Regulation (S) 1.752-2.
<PAGE>
To ensure that Indemnitor would be liable for a specific dollar amount of
the Obligations or such greater or lesser amount as specified in paragraph 1.2
of each of the Previous Indemnity and Hold Harmless Agreements, (the "Old
Indemnified Amount") and bear the Economic Risk of Loss with respect to the Old
Indemnified Amount, it was necessary that Indemnitor, under certain
circumstances pursuant to the terms of the Previous Indemnity and Hold Harmless
Agreements, have the sole liability to pay an amount equal to the Old
Indemnified Amount in connection with the Obligations. Accordingly, for purposes
of ensuring that Indemnitor bore the Economic Risk of Loss as to the Old
Indemnified Amount and that an amount equal to the Old Indemnified Amount of the
Obligations would be allocated to Indemnitor for purposes of Section 752 of the
Code and Treasury Regulation (S) 1.752-2, Indemnitor entered into the Previous
Indemnity and Hold Harmless Agreements for the benefit of the Partnership,
Roadside, Petro, Petro Financial and other parties.
Pursuant to an offering of high yield debt in the amount of $135 million by
the Partnership and Petro Financial, which is unsecured and in registered and
negotiable form, and a new $115 million credit agreement with The First National
Bank of Boston (with the foregoing $135 million high yield debt offering and new
credit agreement more specifically described in the attached Exhibit "A" and
hereinafter referred to as the "1997 Debt Obligations") the debt represented by
the Obligations will be refinanced and repaid; and to evidence the continuing
intent and legal obligation to continue the terms and provisions of the Previous
Indemnity and Hold Harmless Agreements with respect to the 1997 Debt
Obligations, as amended hereunder, Indemnitor is entering into this Agreement.
INDEMNITY
---------
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, including, but not limited to, the events which were attendant to
the formation and operation of the Partnership and the creation and issuance of
the 1997 Debt Obligations, the parties agree as follows:
1. INDEMNIFICATION PROVISIONS
--------------------------
1.1 Indemnitor shall indemnify and hold harmless the Partnership, Petro
Holdings, Petro and Petro Financial, and their respective legal representatives,
successors, assigns, subsidiaries and past and present officers, directors,
agents and employees, (collectively, the "Indemnified Parties") from and against
any and all claims, causes of action, liabilities, obligations, losses, costs,
damages and expenses (including reasonable attorneys' fees) suffered or incurred
by any of the Indemnified Parties, of whatever kind, nature or character,
whether arising before or after the date of this Agreement, and whether known or
unknown, liquidated or unliquidated, fixed or contingent, arising from any loan,
assumption, guaranty or other agreement executed by any Indemnified Party or by
reason of operation of law, in connection with the 1997 Debt Obligations and the
liabilities thereunder, including, but not limited to, the liability of any
Indemnified Party who may be a subrogee with respect to the 1997 Debt
Obligations (the "Indemnified Claims"), in an amount equal to $1,900,000, or
such greater or lesser amount, as specified in paragraph 1.2, below (with the
foregoing amount hereinafter referred to as the "Indemnified Amount"); provided,
however, the indemnity and hold harmless provided hereunder shall not relieve
the Indemnified Parties from making regular interest and
2
<PAGE>
principal payments on and otherwise satisfying all obligations with respect to
the 1997 Debt Obligations until (i) an Event of Default or Default (as defined
in the instruments giving rise to and governing the repayment of the 1997 Debt
Obligations) has occurred in connection with one or more of the 1997 Debt
Obligations which remains uncured and/or is not otherwise waived, (ii) all
amounts owing on the 1997 Debt Obligations in default become immediately due and
payable, and (iii) all real and personal property, if any, liable for or
securing the 1997 Debt Obligations in default has been exhausted or otherwise
disposed of to satisfy the 1997 Debt Obligations. The Indemnified Amount payable
hereunder shall be paid to the Indemnified Parties proportionately based on the
Indemnified Claims incurred by each of the Indemnified Parties over the total
Indemnified Claims incurred by all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount
which Indemnitor shall be required to indemnify and hold harmless the
Indemnified Parties in the manner specified in paragraph 1.1, above, with
respect to the 1997 Debt Obligations shall be no less nor more than the amount
necessary to cause Indemnitor's adjusted tax basis in his interest in the
Partnership pursuant to Subchapter K of Chapter 1 of Subtitle A of the Code at
all times to equal no less than a minimum of One Dollar ($1.00), determined
after (i) taking into account all adjustments to Indemnitor's tax basis in his
interest in the Partnership resulting from Partnership operations, including,
but not limited to, the allocation to Indemnitor of his proportionate share of
income, gains, deductions, losses, credits and all other tax attributes pursuant
to the terms of the Partnership Agreement, (ii) allocating any and all
Nonrecourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-3 and 1.752-4, and (iii) allocating any and all
Recourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-2 and 1.752-4, and after giving effect to the
terms and provisions of this Agreement and its effect on the obligations of
Indemnitor with respect to such Recourse Debt.
1.3 For purposes of this Agreement, the terms "Recourse Debt" and
"Nonrecourse Debt" shall have the meanings assigned to such terms pursuant to
Treasury Regulation (S) 1.752-1(a), and the term "Partner" shall have the
meaning assigned to such term in the Partnership Agreement. Likewise, the terms
"Default" and "Event of Default" shall have the meanings assigned to such terms
in the Indenture dated January 29, 1997 from the Partnership and Petro Financial
to State Street Bank and Trust Company, Boston, Massachusetts, Trustee, relating
to the 1997 Debt Obligations.
1.4 In interpreting and applying the provisions of paragraphs 1.1 and 1.2
of this Agreement, it is hereby specifically agreed by the parties hereto that
the intent of the parties in entering into this Agreement is to subject
Indemnitor to the Economic Risk of Loss for all matters related to the 1997 Debt
Obligations in an amount sufficient for Indemnitor to avoid receiving a
distribution pursuant to Section 752(b) of the Code and the Treasury Regulations
promulgated thereunder to cause Indemnitor to recognize gain pursuant to Section
731(a) of the Code, by Indemnitor receiving the equivalent of a money
distribution which exceeds Indemnitor's adjusted tax basis in his Partnership
interest immediately before such distribution. To that end, this Agreement shall
be interpreted to subject Indemnitor to the Economic Risk of
3
<PAGE>
Loss with respect to the Indemnified Amount and the 1997 Debt Obligations, as
provided in Treasury Regulation (S) 1.752-2, in an amount sufficient to cause
Indemnitor's adjusted tax basis in his interest in the Partnership at all times
to equal no less than a minimum of One Dollar ($1.00).
2. BINDING EFFECT OF AGREEMENT
---------------------------
This Agreement shall be binding upon Indemnitor and his legal
representatives, successors and assigns, and shall be binding upon and inure to
the benefit of the Indemnified Parties and their representatives, successors and
assigns. The indemnities, obligations and agreements of Indemnitor provided for
in this Agreement shall continue in full force and effect until Indemnitor
ceases to be a Partner in the Partnership (unless the Partnership agrees in
writing that the terms of this Agreement shall continue in force with respect to
Indemnitor as a non-Partner of the Partnership), until the liabilities and
obligations of the Indemnified Parties with respect to the 1997 Debt Obligations
and any succeeding indebtedness have terminated or are otherwise barred by
operation of law, or this Agreement is terminated by the mutual written
agreement of Indemnitor and the Indemnified Parties.
3. NO SET-OFF
----------
3.1 No payment required to be made by Indemnitor pursuant to this
Agreement for the benefit of the Indemnified Parties shall be subject to any
right of set-off, contribution, reimbursement, subrogation, counterclaim,
defense, abatement, suspension, deferment or reduction, and Indemnitor shall not
have any right to be released, relieved, or discharged from any obligation or
liability under this Agreement for any reason whatsoever except as expressly
provided herein.
3.2 Notwithstanding the provisions of Section 3.1 above, to the extent
that other current or former Partners in the Partnership enter into Second
Amended and Restated Indemnity and Hold Harmless Agreements or Indemnity and
Hold Harmless Agreements similar in terms and effect to this Agreement
(collectively the "All Existing Indemnity and Hold Harmless Agreements") and the
actual liability hereunder and under such other similar agreements with respect
to the 1997 Debt Obligations is less than the aggregate indemnity obligations of
all such current and former Partners under the terms of such agreements
(including, without limitation, this Agreement), the aggregate liabilities under
the 1997 Debt Obligations shall be borne proportionately by such former and
current Partners determined as follows for each such current and former Partner,
including Indemnitor: (i) the percentage derived by dividing (a) a numerator
consisting of the maximum liability of each former or current Partner under his
Indemnity and Hold Harmless Agreement (whether amended or restated or otherwise)
by (b) a denominator consisting of the total of all such maximum liabilities of
each such former or current Partners under All Existing Amended and Restated
Indemnity and Hold Harmless Agreements, multiplied by (ii) the total of all such
liabilities of each such former or current Partners under All Existing Indemnity
and Hold Harmless Agreements.
4
<PAGE>
4. NOTICE
------
Any Indemnified Party hereunder who wishes to enforce the terms and
conditions of this Agreement against Indemnitor shall provide written notice to
Indemnitor of such intention. Any written notice may be given by an Indemnified
Party and shall be delivered to Indemnitor by mailing the same by United States
mail, postage prepaid, or by courier or facsimile transmission, or by delivery
in person, addressed or delivered as follows:
ATTN: J.A. Cardwell, Jr.
c/o Petro, Inc.
6080 Surety Drive
El Paso, Texas 79905
With a copy to:
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
ATTN: Mr. Roger D. Aksamit
5. SEVERABILITY
------------
This Agreement is severable, and if for any reason any provision or
provisions are determined to be invalid, inoperative, or contrary to any
existing or future law, the remainder of this Agreement shall be considered
valid and operative and effect shall be given to the intent manifested by the
portion held invalid or inoperative.
6. TERMINATION, AMENDMENT, MODIFICATION AND SUPPLEMENTATION
--------------------------------------------------------
This Agreement may be terminated, amended, modified or supplemented only by
the mutual written agreement of Indemnitor and the Indemnified Parties.
7. COUNTERPARTS
------------
This Agreement may be executed by the parties in any number of identical
counterparts, all of which together shall constitute a single binding agreement
between the parties. It shall not be necessary for any particular party to
execute the same counterpart for the various counterparts hereunder to
constitute a binding agreement.
8. GOVERNING LAW
-------------
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE
OF TEXAS.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective from the date first written above.
INDEMNITOR
/s/ J. A. Cardwell, Jr.
-----------------------------------
J.A. Cardwell, Jr.
AGREEMENT AND CONSENT
---------------------
Petro Stopping Centers, L.P., Petro Holdings G.P. Corp., Petro Financial
Corporation and Petro, Inc. on behalf of themselves and their respective legal
representatives, successors, assigns, subsidiaries and past and present
officers, directors, agents and employees, as the Indemnified Parties under the
Amended and Restated Indemnity and Hold Harmless Agreement dated May 24, 1994,
which is amended and restated hereunder, hereby consent and agree to the various
amendments made hereunder to the Amended and Restated Indemnity and Hold
Harmless Agreement dated May 24, 1994.
PETRO STOPPING CENTERS, L.P., a
Delaware limited partnership
By: PETRO, INC., a Texas corporation,
General Partner
By:/s/ J. A. Cardwell
------------------------------------------
Authorized Officer
PETRO HOLDINGS G.P. CORP., a Delaware
corporation
By:/s/ Michael Shein
------------------------------------------
Authorized Officer
6
<PAGE>
PETRO FINANCIAL CORPORATION, a Delaware
corporation
By: /s/ Larry J. Zine
------------------------------------------
Authorized Officer
PETRO, INC., a Texas corporation
By: /s/ J. A. Cardwell
------------------------------------------
Authorized Officer
7
<PAGE>
Exhibit 10.47
SECOND AMENDED AND RESTATED INDEMNITY AND
-----------------------------------------
HOLD HARMLESS AGREEMENT
-----------------------
JAJCO II, INC. - INDEMNITOR
---------------------------
This Second Amended and Restated Indemnity and Hold Harmless Agreement (the
"Agreement") is entered into on this 30th day of January, 1997 by JAJCO II,
Inc., a Delaware corporation ("Indemnitor") as an amendment and restatement and
continuation in its amended and restated form of the certain Amended and
Restated Indemnity and Hold Harmless Agreement dated the 24th day of May, 1994
by JAJCO, II, Inc., which was an amendment and restatement and continuation in
its amended and restated form of that certain Indemnity and Hold Harmless
Agreement dated May 1, 1992 (collectively the "Previous Indemnity and Hold
Harmless Agreements") for the benefit of Petro Stopping Centers, L.P., a
Delaware limited partnership (the "Partnership"), Petro Holdings G.P. Corp., a
Delaware corporation ("Petro Holdings") in its capacity as a general partner of
the Partnership, Petro, Inc., a Texas corporation ("Petro"), in its capacity as
a general partner of the Partnership and Petro Financial Corporation, a Delaware
corporation and wholly owned subsidiary of the Partnership ("Petro Financial"),
as obligors and/or guarantors of certain indebtedness of the Partnership and
Petro PSC, with respect to certain obligations of indebtedness which are more
specifically defined below as either the "Obligations," or "1997 Debt
Obligations."
RECITALS
--------
Indemnitor was a party to that certain Participation Agreement (the
"Participation Agreement"), dated May 1, 1992 and that certain Amended and
Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the
"Partnership Agreement"), dated May 1, 1992. Pursuant to the Participation
Agreement and the Partnership Agreement, Indemnitor agreed to contribute and
conveyed to the Partnership all of those rights and assets more specifically
described in exhibits to the Participation Agreement, subject to such
obligations and indebtedness as the parties to the Partnership Agreement
expressly agreed that the Partnership would assume as set forth in exhibits to
the Participation Agreement and the Partnership Agreement.
Upon the formation of the Partnership and due to certain obligations of
indebtedness more specifically described in Exhibit "A" attached to each of the
Previous Indemnity and Hold Harmless Agreements and made a part thereof for all
purposes (the "Obligations") constituting recourse and nonrecourse debt for
which the Partnership, Roadside, Inc., a Delaware corporation ("Roadside")
(which up until and including the date of this Agreement was a general partner
of the Partnership), Petro and Petro Financial would have been liable, and but
for the operation of the Previous Indemnity and Hold Harmless Agreements, the
Partnership, Roadside, Petro and Petro Financial would have borne the economic
risk of loss for the Obligations for purposes of Section 752 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulations (S) 1.752-2 (the
"Economic Risk of Loss"). As a consequence, but for the operation of the
Previous Indemnity and Hold Harmless Agreements, the Partnership, Roadside,
Petro and Petro Financial would have been allocated all of the Obligations for
purposes of Section 752 of the Code and Treasury Regulation (S) 1.752-2.
<PAGE>
To ensure that Indemnitor would be liable for a specific dollar amount of
the Obligations or such greater or lesser amount as specified in paragraph 1.2
of each of the Previous Indemnity and Hold Harmless Agreements, (the "Old
Indemnified Amount") and bear the Economic Risk of Loss with respect to the Old
Indemnified Amount, it was necessary that Indemnitor, under certain
circumstances pursuant to the terms of the Previous Indemnity and Hold Harmless
Agreements, have the sole liability to pay an amount equal to the Old
Indemnified Amount in connection with the Obligations. Accordingly, for purposes
of ensuring that Indemnitor bore the Economic Risk of Loss as to the Old
Indemnified Amount and that an amount equal to the Old Indemnified Amount of the
Obligations would be allocated to Indemnitor for purposes of Section 752 of the
Code and Treasury Regulation (S) 1.752-2, Indemnitor entered into the Previous
Indemnity and Hold Harmless Agreements for the benefit of the Partnership,
Roadside, Petro, Petro Financial and other parties.
Texas JIMCO, Inc., a Texas corporation, and JAJCO, Inc., an Ohio
corporation, were both parties and indemnitors under Indemnity and Hold Harmless
Agreements dated May 1, 1992. In December, 1993 and pursuant to the laws of the
States of Texas, Ohio and Delaware, Texas JIMCO, Inc. and JAJCO, Inc. were
merged into Indemnitor as the surviving corporation. By operation of the laws of
Texas, Ohio and Delaware, as a consequence of such mergers, the obligations and
liabilities of Texas JIMCO, Inc. and JAJCO, Inc. under their respective
Indemnity and Hold Harmless Agreements each dated May 1, 1992 were assumed by
Indemnitor and for all purposes hereunder any reference in this Agreement to the
Indemnity and Hold Harmless Agreement shall incorporate the Indemnity and Hold
Harmless Agreements of Texas JIMCO, Inc. and JAJCO, Inc. as well as the original
Indemnity and Hold Harmless Agreement of Indemnitor.
Pursuant to an offering of high yield debt in the amount of $135 million by
the Partnership and Petro Financial, which is unsecured and in registered and
negotiable form, and a new $115 million credit agreement with The First National
Bank of Boston (with the foregoing $135 million high yield debt offering and new
credit agreement more specifically described in the attached Exhibit "A" and
hereinafter referred to as the "1997 Debt Obligations") the debt represented by
the Obligations will be refinanced and repaid; and to evidence the continuing
intent and legal obligation to continue the terms and provisions of the Previous
Indemnity and Hold Harmless Agreements with respect to the 1997 Debt
Obligations, as amended hereunder, Indemnitor is entering into this Agreement.
INDEMNITY
---------
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, including, but not limited to, the events which were attendant to
the formation and operation of the Partnership and the creation and issuance of
the 1997 Debt Obligations, the parties agree as follows:
1. INDEMNIFICATION PROVISIONS
--------------------------
1.1 Indemnitor shall indemnify and hold harmless the Partnership, Petro
Holdings, Petro and Petro Financial, and their respective legal representatives,
successors, assigns, subsidiaries and past and present officers, directors,
agents and employees, (collectively, the
2
<PAGE>
"Indemnified Parties") from and against any and all claims, causes of action,
liabilities, obligations, losses, costs, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by any of the Indemnified
Parties, of whatever kind, nature or character, whether arising before or after
the date of this Agreement, and whether known or unknown, liquidated or
unliquidated, fixed or contingent, arising from any loan, assumption, guaranty
or other agreement executed by any Indemnified Party or by reason of operation
of law, in connection with the 1997 Debt Obligations and the liabilities
thereunder, including, but not limited to, the liability of any Indemnified
Party who may be a subrogee with respect to the 1997 Debt Obligations (the
"Indemnified Claims"), in an amount equal to $800,000, or such greater or lesser
amount, as specified in paragraph 1.2, below (with the foregoing amount
hereinafter referred to as the "Indemnified Amount"); provided, however, the
indemnity and hold harmless provided hereunder shall not relieve the Indemnified
Parties from making regular interest and principal payments on and otherwise
satisfying all obligations with respect to the 1997 Debt Obligations until (i)
an Event of Default or Default (as defined in the instruments giving rise to and
governing the repayment of the 1997 Debt Obligations) has occurred in connection
with one or more of the 1997 Debt Obligations which remains uncured and/or is
not otherwise waived, (ii) all amounts owing on the 1997 Debt Obligations in
default become immediately due and payable, and (iii) all real and personal
property, if any, liable for or securing the 1997 Debt Obligations in default
has been exhausted or otherwise disposed of to satisfy the 1997 Debt
Obligations. The Indemnified Amount payable hereunder shall be paid to the
Indemnified Parties proportionately based on the Indemnified Claims incurred by
each of the Indemnified Parties over the total Indemnified Claims incurred by
all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount
which Indemnitor shall be required to indemnify and hold harmless the
Indemnified Parties in the manner specified in paragraph 1.1, above, with
respect to the 1997 Debt Obligations shall be no less nor more than the amount
necessary to cause Indemnitor's adjusted tax basis in his interest in the
Partnership pursuant to Subchapter K of Chapter 1 of Subtitle A of the Code at
all times to equal no less than a minimum of One Dollar ($1.00), determined
after (i) taking into account all adjustments to Indemnitor's tax basis in his
interest in the Partnership resulting from Partnership operations, including,
but not limited to, the allocation to Indemnitor of his proportionate share of
income, gains, deductions, losses, credits and all other tax attributes pursuant
to the terms of the Partnership Agreement, (ii) allocating any and all
Nonrecourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-3 and 1.752-4, and (iii) allocating any and all
Recourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-2 and 1.752-4, and after giving effect to the
terms and provisions of this Agreement and its effect on the obligations of
Indemnitor with respect to such Recourse Debt.
1.3 For purposes of this Agreement, the terms "Recourse Debt" and
"Nonrecourse Debt" shall have the meanings assigned to such terms pursuant to
Treasury Regulation (S) 1.752-1(a), and the term "Partner" shall have the
meaning assigned to such term in the Partnership Agreement. Likewise, the terms
"Default" and "Event of Default" shall have the meanings assigned to such terms
in the Indenture dated January 29, 1997 from the Partnership and Petro
3
<PAGE>
Financial to State Street Bank and Trust Company, Boston, Massachusetts,
Trustee, relating to the 1997 Debt Obligations.
1.4 In interpreting and applying the provisions of paragraphs 1.1 and 1.2
of this Agreement, it is hereby specifically agreed by the parties hereto that
the intent of the parties in entering into this Agreement is to subject
Indemnitor to the Economic Risk of Loss for all matters related to the 1997 Debt
Obligations in an amount sufficient for Indemnitor to avoid receiving a
distribution pursuant to Section 752(b) of the Code and the Treasury Regulations
promulgated thereunder to cause Indemnitor to recognize gain pursuant to Section
731(a) of the Code, by Indemnitor receiving the equivalent of a money
distribution which exceeds Indemnitor's adjusted tax basis in his Partnership
interest immediately before such distribution. To that end, this Agreement shall
be interpreted to subject Indemnitor to the Economic Risk of Loss with respect
to the Indemnified Amount and the 1997 Debt Obligations, as provided in Treasury
Regulation (S) 1.752-2, in an amount sufficient to cause Indemnitor's adjusted
tax basis in his interest in the Partnership at all times to equal no less than
a minimum of One Dollar ($1.00).
2. BINDING EFFECT OF AGREEMENT
---------------------------
This Agreement shall be binding upon Indemnitor and his legal
representatives, successors and assigns, and shall be binding upon and inure to
the benefit of the Indemnified Parties and their representatives, successors and
assigns. The indemnities, obligations and agreements of Indemnitor provided for
in this Agreement shall continue in full force and effect until Indemnitor
ceases to be a Partner in the Partnership (unless the Partnership agrees in
writing that the terms of this Agreement shall continue in force with respect to
Indemnitor as a non-Partner of the Partnership), until the liabilities and
obligations of the Indemnified Parties with respect to the 1997 Debt Obligations
and any succeeding indebtedness have terminated or are otherwise barred by
operation of law, or this Agreement is terminated by the mutual written
agreement of Indemnitor and the Indemnified Parties.
3. NO SET-OFF
----------
3.1 No payment required to be made by Indemnitor pursuant to this
Agreement for the benefit of the Indemnified Parties shall be subject to any
right of set-off, contribution, reimbursement, subrogation, counterclaim,
defense, abatement, suspension, deferment or reduction, and Indemnitor shall not
have any right to be released, relieved, or discharged from any obligation or
liability under this Agreement for any reason whatsoever except as expressly
provided herein.
3.2 Notwithstanding the provisions of Section 3.1 above, to the extent
that other current or former Partners in the Partnership enter into Second
Amended and Restated Indemnity and Hold Harmless Agreements or Indemnity and
Hold Harmless Agreements similar in terms and effect to this Agreement
(collectively the "All Existing Indemnity and Hold Harmless Agreements") and the
actual liability hereunder and under such other similar agreements with respect
to the 1997 Debt Obligations is less than the aggregate indemnity obligations of
all such current and former Partners under the terms of such agreements
(including, without limitation, this Agreement), the aggregate liabilities under
the 1997 Debt Obligations shall be borne
4
<PAGE>
proportionately by such former and current Partners determined as follows for
each such current and former Partner, including Indemnitor: (i) the percentage
derived by dividing (a) a numerator consisting of the maximum liability of each
former or current Partner under his Indemnity and Hold Harmless Agreement
(whether amended or restated or otherwise) by (b) a denominator consisting of
the total of all such maximum liabilities of each such former or current
Partners under All Existing Amended and Restated Indemnity and Hold Harmless
Agreements multiplied by (ii) the total of all such liabilities of each such
former or current Partners under All Existing Indemnity and Hold Harmless
Agreements.
4. NOTICE
------
Any Indemnified Party hereunder who wishes to enforce the terms and
conditions of this Agreement against Indemnitor shall provide written notice to
Indemnitor of such intention. Any written notice may be given by an Indemnified
Party and shall be delivered to Indemnitor by mailing the same by United States
mail, postage prepaid, or by courier or facsimile transmission, or by delivery
in person, addressed or delivered as follows:
ATTN: JAJCO II, Inc.
c/o Petro, Inc.
6080 Surety Drive
El Paso, Texas 79905
With a copy to:
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
ATTN: Mr. Roger D. Aksamit
5. SEVERABILITY
------------
This Agreement is severable, and if for any reason any provision or
provisions are determined to be invalid, inoperative, or contrary to any
existing or future law, the remainder of this Agreement shall be considered
valid and operative and effect shall be given to the intent manifested by the
portion held invalid or inoperative.
6. TERMINATION, AMENDMENT, MODIFICATION AND SUPPLEMENTATION
--------------------------------------------------------
This Agreement may be terminated, amended, modified or supplemented only by
the mutual written agreement of Indemnitor and the Indemnified Parties.
7. COUNTERPARTS
------------
This Agreement may be executed by the parties in any number of identical
counterparts, all of which together shall constitute a single binding agreement
between the parties. It shall not be necessary for any particular party to
execute the same counterpart for the various counterparts hereunder to
constitute a binding agreement.
5
<PAGE>
8. GOVERNING LAW
-------------
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE
OF TEXAS.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective from the date first written above.
INDEMNITOR
JAJCO II, Inc.
/s/ J.A. Cardwell, Jr.
------------------------------------
Authorized Officer
6
<PAGE>
AGREEMENT AND CONSENT
---------------------
Petro Stopping Centers, L.P., Petro Holdings G.P. Corp., Petro Financial
Corporation and Petro, Inc. on behalf of themselves and their respective legal
representatives, successors, assigns, subsidiaries and past and present
officers, directors, agents and employees, as the Indemnified Parties under the
Amended and Restated Indemnity and Hold Harmless Agreement dated May 24, 1994,
which is amended and restated hereunder, hereby consent and agree to the various
amendments made hereunder to the Amended and Restated Indemnity and Hold
Harmless Agreement dated May 24, 1994.
PETRO STOPPING CENTERS, L.P., a
Delaware limited partnership
By: PETRO, INC., a Texas corporation, General
Partner
By: /s/ J.A. Cardwell
-----------------------------------------------
Authorized Officer
PETRO HOLDINGS G.P. CORP., a Delaware
corporation
By: /s/ Michael Shein
-----------------------------------------------
Authorized Officer
PETRO FINANCIAL CORPORATION, a Delaware
corporation
By: /s/ Larry J. Zine
-----------------------------------------------
Authorized Officer
PETRO, INC., a Texas corporation
By: /s/ J.A. Cardwell
-----------------------------------------------
Authorized Officer
7
<PAGE>
Exhibit 10.48
INDEMNITY AND
-------------
HOLD HARMLESS AGREEMENT
-----------------------
PETRO, INC.- INDEMNITOR
-----------------------
This Indemnity and Hold Harmless Agreement (the "Agreement") is entered
into on this 30th day of January, 1997 by Petro, Inc., a Texas corporation,
("Indemnitor") for the benefit of Petro Stopping Centers, L.P., a Delaware
limited partnership (the "Partnership"), Petro Holdings G.P. Corp., a Delaware
corporation ("Petro Holdings") in its capacity as a general partner of the
Partnership, Petro, Inc., a Texas corporation ("Petro"), in its capacity as a
general partner of the Partnership and Petro Financial Corporation, a Delaware
corporation and wholly owned subsidiary of the Partnership ("Petro Financial"),
as obligors and/or guarantors of certain indebtedness of the Partnership and
Petro PSC, with respect to certain obligations of indebtedness which are more
specifically defined below as either the "Obligations," or "1997 Debt
Obligations."
RECITALS
--------
Indemnitor was a party to that certain Participation Agreement (the
"Participation Agreement"), dated May 1, 1992 and that certain Amended and
Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the
"Partnership Agreement"), dated May 1, 1992. Pursuant to the Participation
Agreement and the Partnership Agreement, Indemnitor agreed to contribute and
conveyed to the Partnership all of those rights and assets more specifically
described in exhibits to the Participation Agreement, subject to such
obligations and indebtedness as the parties to the Partnership Agreement
expressly agreed that the Partnership would assume as set forth in exhibits to
the Participation Agreement and the Partnership Agreement.
Upon the formation of the Partnership and due to certain obligations of
indebtedness more specifically described in Exhibit "A" attached to each of the
previous Indemnity and Hold Harmless Agreements of the Partners (the "Previous
Indemnity and Hold Harmless Agreements") and made a part thereof for all
purposes (the "Obligations") constituting recourse and nonrecourse debt for
which the Partnership, Roadside, Inc., a Delaware corporation ("Roadside")
(which up until and including the date of this Agreement was a general partner
of the Partnership), Petro and Petro Financial would have been liable, and but
for the operation of the Previous Indemnity and Hold Harmless Agreements, the
Partnership, Roadside, Petro and Petro Financial would have borne the economic
risk of loss for the Obligations for purposes of Section 752 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulations (S) 1.752-2 (the
"Economic Risk of Loss"). As a consequence, but for the operation of the
Previous Indemnity and Hold Harmless Agreements, the Partnership, Roadside,
Petro and Petro Financial would have been allocated all of the Obligations for
purposes of Section 752 of the Code and Treasury Regulation (S) 1.752-2.
For purposes of ensuring that Indemnitor bears the Economic Risk of Loss as
to the Indemnified Amount and that an amount equal to the Indemnified Amount of
the 1997 Obligations will be allocated to Indemnitor for purposes of Section 752
of the Code and Treasury Regulation (S) 1.752-2, Indemnitor is entering into
this Indemnity and Hold Harmless Agreements for the benefit of the Partnership,
Roadside, Petro, Petro Financial and other parties.
<PAGE>
Pursuant to an offering of high yield debt in the amount of $135 million by
the Partnership and Petro Financial, which is unsecured and in registered and
negotiable form, and a new $115 million credit agreement with The First National
Bank of Boston (with the foregoing $135 million high yield debt offering and new
credit agreement more specifically described in the attached Exhibit "A" and
hereinafter referred to as the "1997 Debt Obligations") the debt represented by
the Obligations will be refinanced and repaid; and to evidence the intent and
legal obligation for Indemnitor to bear the Economic Risk of Loss as to the
Indemnified Amount with respect to the 1997 Debt Obligations, as amended
hereunder, Indemnitor is entering into this Agreement.
INDEMNITY
---------
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, including, but not limited to, the events which were attendant to
the formation and operation of the Partnership and the creation and issuance of
the 1997 Debt Obligations, the parties agree as follows:
1. INDEMNIFICATION PROVISIONS
--------------------------
1.1 Indemnitor shall indemnify and hold harmless the Partnership, Petro
Holdings, Petro and Petro Financial, and their respective legal representatives,
successors, assigns, subsidiaries and past and present officers, directors,
agents and employees, (collectively, the "Indemnified Parties") from and against
any and all claims, causes of action, liabilities, obligations, losses, costs,
damages and expenses (including reasonable attorneys' fees) suffered or incurred
by any of the Indemnified Parties, of whatever kind, nature or character,
whether arising before or after the date of this Agreement, and whether known or
unknown, liquidated or unliquidated, fixed or contingent, arising from any loan,
assumption, guaranty or other agreement executed by any Indemnified Party or by
reason of operation of law, in connection with the 1997 Debt Obligations and the
liabilities thereunder, including, but not limited to, the liability of any
Indemnified Party who may be a subrogee with respect to the 1997 Debt
Obligations (the "Indemnified Claims"), in an amount equal to $5,000,000, or
such greater or lesser amount, as specified in paragraph 1.2, below (with the
foregoing amount hereinafter referred to as the "Indemnified Amount"); provided,
however, the indemnity and hold harmless provided hereunder shall not relieve
the Indemnified Parties from making regular interest and principal payments on
and otherwise satisfying all obligations with respect to the 1997 Debt
Obligations until (i) an Event of Default or Default (as defined in the
instruments giving rise to and governing the repayment of the 1997 Debt
Obligations) has occurred in connection with one or more of the 1997 Debt
Obligations which remains uncured and/or is not otherwise waived, (ii) all
amounts owing on the 1997 Debt Obligations in default become immediately due and
payable, and (iii) all real and personal property, if any, liable for or
securing the 1997 Debt Obligations in default has been exhausted or otherwise
disposed of to satisfy the 1997 Debt Obligations. The Indemnified Amount payable
hereunder shall be paid to the Indemnified Parties proportionately based on the
Indemnified Claims incurred by each of the Indemnified Parties over the total
Indemnified Claims incurred by all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount
which Indemnitor shall be required to indemnify and hold harmless the
Indemnified Parties in the
2
<PAGE>
manner specified in paragraph 1.1, above, with respect to the 1997 Debt
Obligations shall be no less nor more than the amount necessary to cause
Indemnitor's adjusted tax basis in his interest in the Partnership pursuant to
Subchapter K of Chapter 1 of Subtitle A of the Code at all times to equal no
less than a minimum of One Dollar ($1.00), determined after (i) taking into
account all adjustments to Indemnitor's tax basis in his interest in the
Partnership resulting from Partnership operations, including, but not limited
to, the allocation to Indemnitor of his proportionate share of income, gains,
deductions, losses, credits and all other tax attributes pursuant to the terms
of the Partnership Agreement, (ii) allocating any and all Nonrecourse Debt of
the Partnership and any lower-tier partnerships in which the Partnership owns an
interest to Indemnitor and the other Partners of the Partnership pursuant to the
terms and provisions of Section 752 of the Code and Treasury Regulation (S)(S)
1.752-3 and 1.752-4, and (iii) allocating any and all Recourse Debt of the
Partnership and any lower-tier partnerships in which the Partnership owns an
interest to Indemnitor and the other Partners of the Partnership pursuant to the
terms and provisions of Section 752 of the Code and Treasury Regulation (S)(S)
1.752-2 and 1.752-4, and after giving effect to the terms and provisions of this
Agreement and its effect on the obligations of Indemnitor with respect to such
Recourse Debt.
1.3 For purposes of this Agreement, the terms "Recourse Debt" and
"Nonrecourse Debt" shall have the meanings assigned to such terms pursuant to
Treasury Regulation (S) 1.752-1(a), and the term "Partner" shall have the
meaning assigned to such term in the Partnership Agreement. Likewise, the terms
"Default" and "Event of Default" shall have the meanings assigned to such terms
in the Indenture dated January 29, 1997 from the Partnership and Petro Financial
to State Street Bank and Trust Company, Boston, Massachusetts, Trustee, relating
to the 1997 Debt Obligations.
1.4 In interpreting and applying the provisions of paragraphs 1.1 and 1.2
of this Agreement, it is hereby specifically agreed by the parties hereto that
the intent of the parties in entering into this Agreement is to subject
Indemnitor to the Economic Risk of Loss for all matters related to the 1997 Debt
Obligations in an amount sufficient for Indemnitor to avoid receiving a
distribution pursuant to Section 752(b) of the Code and the Treasury Regulations
promulgated thereunder to cause Indemnitor to recognize gain pursuant to Section
731(a) of the Code, by Indemnitor receiving the equivalent of a money
distribution which exceeds Indemnitor's adjusted tax basis in his Partnership
interest immediately before such distribution. To that end, this Agreement shall
be interpreted to subject Indemnitor to the Economic Risk of Loss with respect
to the Indemnified Amount and the 1997 Debt Obligations, as provided in Treasury
Regulation (S) 1.752-2, in an amount sufficient to cause Indemnitor's adjusted
tax basis in his interest in the Partnership at all times to equal no less than
a minimum of One Dollar ($1.00).
2. BINDING EFFECT OF AGREEMENT
---------------------------
This Agreement shall be binding upon Indemnitor and its legal
representatives, successors and assigns, and shall be binding upon and inure to
the benefit of the Indemnified Parties and their representatives, successors and
assigns. The indemnities, obligations and agreements of Indemnitor provided for
in this Agreement shall continue in full force and effect until Indemnitor
ceases to be a Partner in the Partnership (unless the Partnership agrees in
writing that the terms of this Agreement shall continue in force with respect to
Indemnitor as a non-Partner of the
3
<PAGE>
Partnership), until the liabilities and obligations of the Indemnified Parties
with respect to the 1997 Debt Obligations and any succeeding indebtedness have
terminated or are otherwise barred by operation of law, or this Agreement is
terminated by the mutual written agreement of Indemnitor and the Indemnified
Parties.
3. NO SET-OFF
----------
3.1 No payment required to be made by Indemnitor pursuant to this
Agreement for the benefit of the Indemnified Parties shall be subject to any
right of set-off, contribution, reimbursement, subrogation, counterclaim,
defense, abatement, suspension, deferment or reduction, and Indemnitor shall not
have any right to be released, relieved, or discharged from any obligation or
liability under this Agreement for any reason whatsoever except as expressly
provided herein.
3.2 Notwithstanding the provisions of Section 3.1 above, to the extent
that other current or former Partners in the Partnership enter into Second
Amended and Restated Indemnity and Hold Harmless Agreements or Indemnity and
Hold Harmless Agreements similar in terms and effect to this Agreement
(collectively the "All Existing Indemnity and Hold Harmless Agreements") and the
actual liability hereunder and under such other similar agreements with respect
to the 1997 Debt Obligations is less than the aggregate indemnity obligations of
all such current and former Partners under the terms of such agreements
(including, without limitation, this Agreement), the aggregate liabilities under
the 1997 Debt Obligations shall be borne proportionately by such former and
current Partners determined as follows for each such current and former Partner,
including Indemnitor: (i) the percentage derived by dividing (a) a numerator
consisting of the maximum liability of each former or current Partner under his
Indemnity and Hold Harmless Agreement (whether amended or restated or otherwise)
by (b) a denominator consisting of the total of all such maximum liabilities of
each such former or current Partners under All Existing Amended and Restated
Indemnity and Hold Harmless Agreements, multiplied by (ii) the total of all such
liabilities of each such former or current Partners under All Existing Indemnity
and Hold Harmless Agreements.
4. NOTICE
------
Any Indemnified Party hereunder who wishes to enforce the terms and
conditions of this Agreement against Indemnitor shall provide written notice to
Indemnitor of such intention. Any written notice may be given by an Indemnified
Party and shall be delivered to Indemnitor by mailing the same by United States
mail, postage prepaid, or by courier or facsimile transmission, or by delivery
in person, addressed or delivered as follows:
ATTN: J. A. Cardwell, Sr.
c/o Petro, Inc.
6080 Surety Drive
El Paso, Texas 79905
4
<PAGE>
With a copy to:
Kemp, Smith, Duncan & Hammond, P.C.
2000 Norwest Plaza
El Paso, Texas 79901
ATTN: Mr. Roger D. Aksamit
5. SEVERABILITY
------------
This Agreement is severable, and if for any reason any provision or
provisions are determined to be invalid, inoperative, or contrary to any
existing or future law, the remainder of this Agreement shall be considered
valid and operative and effect shall be given to the intent manifested by the
portion held invalid or inoperative.
6. TERMINATION, AMENDMENT, MODIFICATION AND SUPPLEMENTATION
--------------------------------------------------------
This Agreement may be terminated, amended, modified or supplemented only by
the mutual written agreement of Indemnitor and the Indemnified Parties.
7. COUNTERPARTS
------------
This Agreement may be executed by the parties in any number of identical
counterparts, all of which together shall constitute a single binding agreement
between the parties. It shall not be necessary for any particular party to
execute the same counterpart for the various counterparts hereunder to
constitute a binding agreement.
8. GOVERNING LAW
-------------
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE
OF TEXAS.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective from the date first written above.
INDEMNITOR
PETRO, INC., a Texas corporation
By: /s/ J. A. Cardwell
-------------------------------------
J. A. Cardwell, Sr., President
AGREEMENT AND CONSENT
---------------------
Petro Stopping Centers, L.P., Petro Holdings G.P. Corp., Petro Financial
Corporation and Petro, Inc. on behalf of themselves and their respective legal
representatives, successors, assigns, subsidiaries and past and present
officers, directors, agents and employees, as the Indemnified Parties under the
Indemnity and Hold Harmless Agreement of even date herewith, hereby consent and
agree to the Indemnity and Hold Harmless Agreement of even date herewith.
PETRO STOPPING CENTERS, L.P., a
Delaware limited partnership
By: PETRO, INC., a Texas corporation,
General Partner
By:/s/ J. A. Cardwell
-----------------------------------------------
Authorized Officer
PETRO HOLDINGS G.P. CORP., a Delaware
corporation
By:/s/ Michael Shein
-----------------------------------------------
Authorized Officer
6
<PAGE>
PETRO FINANCIAL CORPORATION, a Delaware
corporation
By:/s/ Larry J. Zine
-----------------------------------------------
Authorized Officer
PETRO, INC., a Texas corporation
By:/s/ J. A. Cardwell
-----------------------------------------------
Authorized Officer
7
<PAGE>
EXHIBIT 10.49
SECOND AMENDED AND RESTATED INDEMNITY AND
-----------------------------------------
HOLD HARMLESS AGREEMENT
-----------------------
ARCADIAN MANAGEMENT CORPORATION - INDEMNITOR
--------------------------------------------
This Second Amended and Restated Indemnity and Hold Harmless Agreement (the
"Agreement") is entered into on this 30th day of January, 1997 by Arcadian
Management Corporation, a Colorado corporation ("Indemnitor") as an amendment
and restatement and continuation in its amended and restated form of the certain
Amended and Restated Indemnity and Hold Harmless Agreement dated the 24th day of
May, 1994 by Arcadian Management Corporation, which was an amendment and
restatement and continuation in its amended and restated form of that certain
Indemnity and Hold Harmless Agreement dated May 1, 1992 (collectively the
"Previous Indemnity and Hold Harmless Agreements") for the benefit of Petro
Stopping Centers, L.P., a Delaware limited partnership (the "Partnership"),
Petro Holdings G.P. Corp., a Delaware corporation ("Petro Holdings") in its
capacity as a general partner of the Partnership, Petro, Inc., a Texas
corporation ("Petro"), in its capacity as a general partner of the Partnership
and Petro Financial Corporation, a Delaware corporation and wholly owned
subsidiary of the Partnership ("Petro Financial"), as obligors and/or guarantors
of certain indebtedness of the Partnership and Petro PSC, with respect to
certain obligations of indebtedness which are more specifically defined below as
either the "Obligations," or "1997 Debt Obligations."
RECITALS
--------
Indemnitor was a party to that certain Participation Agreement (the
"Participation Agreement"), dated May 1, 1992 and that certain Amended and
Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the
"Partnership Agreement"), dated May 1, 1992. Pursuant to the Participation
Agreement and the Partnership Agreement, Indemnitor agreed to contribute and
conveyed to the Partnership all of those rights and assets more specifically
described in exhibits to the Participation Agreement, subject to such
obligations and indebtedness as the parties to the Partnership Agreement
expressly agreed that the Partnership would assume as set forth in exhibits to
the Participation Agreement and the Partnership Agreement.
Upon the formation of the Partnership and due to certain obligations of
indebtedness more specifically described in Exhibit "A" attached to each of the
Previous Indemnity and Hold Harmless Agreements and made a part thereof for all
purposes (the "Obligations") constituting recourse and nonrecourse debt for
which the Partnership, Roadside, Inc., a Delaware corporation ("Roadside")
(which up until and including the date of this Agreement was a general partner
of the Partnership), Petro and Petro Financial would have been liable, and but
for the operation of the Previous Indemnity and Hold Harmless Agreements, the
Partnership, Roadside, Petro and Petro Financial would have borne the economic
risk of loss for the Obligations for purposes of Section 752 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulations (S) 1.752-2 (the
"Economic Risk of Loss"). As a consequence, but for the operation of the
Previous Indemnity and Hold Harmless Agreements, the Partnership, Roadside,
Petro and Petro Financial would have been allocated all of the Obligations for
purposes of Section 752 of the Code and Treasury Regulation (S) 1.752-2.
<PAGE>
To ensure that Indemnitor would be liable for a specific dollar amount of
the Obligations or such greater or lesser amount as specified in paragraph 1.2
of each of the Previous Indemnity and Hold Harmless Agreements, (the "Old
Indemnified Amount") and bear the Economic Risk of Loss with respect to the Old
Indemnified Amount, it was necessary that Indemnitor, under certain
circumstances pursuant to the terms of the Previous Indemnity and Hold Harmless
Agreements, have the sole liability to pay an amount equal to the Old
Indemnified Amount in connection with the Obligations. Accordingly, for
purposes of ensuring that Indemnitor bore the Economic Risk of Loss as to the
Old Indemnified Amount and that an amount equal to the Old Indemnified Amount of
the Obligations would be allocated to Indemnitor for purposes of Section 752 of
the Code and Treasury Regulation (S) 1.752-2, Indemnitor entered into the
Previous Indemnity and Hold Harmless Agreements for the benefit of the
Partnership, Roadside, Petro, Petro Financial and other parties.
Effective February 22, 1993, the Partnership redeemed Indemnitor's
partnership interest in the Partnership for $1,100,000, payable in semiannual
installments of $100,000. Notwithstanding the redemption of Indemnitor's
partnership interest in the Partnership, it was agreed by Indemnitor and the
Indemnified Parties under the Indemnity and Hold Harmless Agreement dated May 1,
1992, that the obligations and liabilities of Indemnitor under such agreement
would continue in force and effect until otherwise terminated in writing by
Indemnitor and the Indemnified Parties.
Pursuant to an offering of high yield debt in the amount of $135 million by
the Partnership and Petro Financial, which is unsecured and in registered and
negotiable form, and a new $115 million credit agreement with The First National
Bank of Boston (with the foregoing $135 million high yield debt offering and new
credit agreement more specifically described in the attached Exhibit "A" and
hereinafter referred to as the "1997 Debt Obligations") the debt represented by
the Obligations will be refinanced and repaid; and to evidence the continuing
intent and legal obligation to continue the terms and provisions of the Previous
Indemnity and Hold Harmless Agreements with respect to the 1997 Debt
Obligations, as amended hereunder, Indemnitor is entering into this Agreement.
INDEMNITY
---------
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, including, but not limited to, the events which were attendant to
the formation and operation of the Partnership and the creation and issuance of
the 1997 Debt Obligations, the parties agree as follows:
1. INDEMNIFICATION PROVISIONS
--------------------------
1.1 Indemnitor shall indemnify and hold harmless the Partnership, Petro
Holdings, Petro and Petro Financial, and their respective legal representatives,
successors, assigns, subsidiaries and past and present officers, directors,
agents and employees, (collectively, the "Indemnified Parties") from and against
any and all claims, causes of action, liabilities, obligations, losses, costs,
damages and expenses (including reasonable attorneys' fees) suffered or incurred
by any of the Indemnified Parties, of whatever kind, nature or character,
whether arising before or after the date of this Agreement, and whether known or
unknown, liquidated
2
<PAGE>
or unliquidated, fixed or contingent, arising from any loan, assumption,
guaranty or other agreement executed by any Indemnified Party or by reason of
operation of law, in connection with the 1997 Debt Obligations and the
liabilities thereunder, including, but not limited to, the liability of any
Indemnified Party who may be a subrogee with respect to the 1997 Debt
Obligations (the "Indemnified Claims"), in an amount equal to $1,270,000, or
such greater or lesser amount, as specified in paragraph 1.2, below (with the
foregoing amount hereinafter referred to as the "Indemnified Amount"); provided,
however, the indemnity and hold harmless provided hereunder shall not relieve
the Indemnified Parties from making regular interest and principal payments on
and otherwise satisfying all obligations with respect to the 1997 Debt
Obligations until (i) an Event of Default or Default (as defined in the
instruments giving rise to and governing the repayment of the 1997 Debt
Obligations) has occurred in connection with one or more of the 1997 Debt
Obligations which remains uncured and/or is not otherwise waived, (ii) all
amounts owing on the 1997 Debt Obligations in default become immediately due and
payable, and (iii) all real and personal property, if any, liable for or
securing the 1997 Debt Obligations in default has been exhausted or otherwise
disposed of to satisfy the 1997 Debt Obligations. The Indemnified Amount
payable hereunder shall be paid to the Indemnified Parties proportionately based
on the Indemnified Claims incurred by each of the Indemnified Parties over the
total Indemnified Claims incurred by all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount
which Indemnitor shall be required to indemnify and hold harmless the
Indemnified Parties in the manner specified in paragraph 1.1, above, with
respect to the 1997 Debt Obligations shall be no less nor more than the amount
necessary to cause Indemnitor's adjusted tax basis in his interest in the
Partnership pursuant to Subchapter K of Chapter 1 of Subtitle A of the Code at
all times to equal no less than a minimum of One Dollar ($1.00), determined
after (i) taking into account all adjustments to Indemnitor's tax basis in his
interest in the Partnership resulting from Partnership operations, including,
but not limited to, the allocation to Indemnitor of his proportionate share of
income, gains, deductions, losses, credits and all other tax attributes pursuant
to the terms of the Partnership Agreement, (ii) allocating any and all
Nonrecourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-3 and 1.752-4, and (iii) allocating any and all
Recourse Debt of the Partnership and any lower-tier partnerships in which the
Partnership owns an interest to Indemnitor and the other Partners of the
Partnership pursuant to the terms and provisions of Section 752 of the Code and
Treasury Regulation (S)(S) 1.752-2 and 1.752-4, and after giving effect to the
terms and provisions of this Agreement and its effect on the obligations of
Indemnitor with respect to such Recourse Debt.
1.3 For purposes of this Agreement, the terms "Recourse Debt" and
"Nonrecourse Debt" shall have the meanings assigned to such terms pursuant to
Treasury Regulation (S) 1.752-1(a), and the term "Partner" shall have the
meaning assigned to such term in the Partnership Agreement. Likewise, the terms
"Default" and "Event of Default" shall have the meanings assigned to such terms
in the Indenture dated January 29, 1997 from the Partnership and Petro Financial
to State Street Bank and Trust Company, Boston, Massachusetts, Trustee, relating
to the 1997 Debt Obligations.
3
<PAGE>
1.4 In interpreting and applying the provisions of paragraphs 1.1 and 1.2
of this Agreement, it is hereby specifically agreed by the parties hereto that
the intent of the parties in entering into this Agreement is to subject
Indemnitor to the Economic Risk of Loss for all matters related to the 1997 Debt
Obligations in an amount sufficient for Indemnitor to avoid receiving a
distribution pursuant to Section 752(b) of the Code and the Treasury Regulations
promulgated thereunder to cause Indemnitor to recognize gain pursuant to Section
731(a) of the Code, by Indemnitor receiving the equivalent of a money
distribution which exceeds Indemnitor's adjusted tax basis in his Partnership
interest immediately before such distribution. To that end, this Agreement
shall be interpreted to subject Indemnitor to the Economic Risk of Loss with
respect to the Indemnified Amount and the 1997 Debt Obligations, as provided in
Treasury Regulation (S) 1.752-2, in an amount sufficient to cause Indemnitor's
adjusted tax basis in his interest in the Partnership at all times to equal no
less than a minimum of One Dollar ($1.00).
2. BINDING EFFECT OF AGREEMENT
---------------------------
This Agreement shall be binding upon Indemnitor and his legal
representatives, successors and assigns, and shall be binding upon and inure to
the benefit of the Indemnified Parties and their representatives, successors and
assigns. The indemnities, obligations and agreements of Indemnitor provided for
in this Agreement shall continue in full force and effect until the earlier of
(i) March 31, 1998, (ii) the 1997 Debt Obligations and any succeeding
indebtedness have terminated or are otherwise barred by operation of law, or
(iii) this Agreement is terminated by the mutual written agreement of Indemnitor
and the Indemnified Parties.
3. NO SET-OFF
----------
3.1 No payment required to be made by Indemnitor pursuant to this
Agreement for the benefit of the Indemnified Parties shall be subject to any
right of set-off, contribution, reimbursement, subrogation, counterclaim,
defense, abatement, suspension, deferment or reduction, and Indemnitor shall not
have any right to be released, relieved, or discharged from any obligation or
liability under this Agreement for any reason whatsoever except as expressly
provided herein.
3.2 Notwithstanding the provisions of Section 3.1 above, to the extent
that other current or former Partners in the Partnership enter into Second
Amended and Restated Indemnity and Hold Harmless Agreements or Indemnity and
Hold Harmless Agreements similar in terms and effect to this Agreement
(collectively the "All Existing Indemnity and Hold Harmless Agreements") and the
actual liability hereunder and under such other similar agreements with respect
to the 1997 Debt Obligations is less than the aggregate indemnity obligations of
all such current and former Partners under the terms of such agreements
(including, without limitation, this Agreement), the aggregate liabilities under
the 1997 Debt Obligations shall be borne proportionately by such former and
current Partners determined as follows for each such current and former Partner,
including Indemnitor: (i) the percentage derived by dividing (a) a numerator
consisting of the maximum liability of each former or current Partner under his
Indemnity and Hold Harmless Agreement (whether amended or restated or otherwise)
by (b) a denominator consisting of the total of all such maximum liabilities of
each such former or current Partners under All Existing Amended and Restated
Indemnity and Hold Harmless
4
<PAGE>
Agreements, multiplied by (ii) the total of all such liabilities of each such
former or current Partners under All Existing Indemnity and Hold Harmless
Agreements.
4. NOTICE
------
Any Indemnified Party hereunder who wishes to enforce the terms and
conditions of this Agreement against Indemnitor shall provide written notice to
Indemnitor of such intention. Any written notice may be given by an Indemnified
Party and shall be delivered to Indemnitor by mailing the same by United States
mail, postage prepaid, or by courier or facsimile transmission, or by delivery
in person, addressed or delivered as follows:
ATTN: Arcadian Management Corporation
c/o La Croix & Associates, P.C.
725 Rood Avenue
Grand Junction, Colorado 81501
Attn: Thomas R. La Croix
With a copy to:
La Croix & Associates, P.C.
725 Rood Avenue
Grand Junction, Colorado 81501
Attn: Thomas R. La Croix
5. SEVERABILITY
------------
This Agreement is severable, and if for any reason any provision or
provisions are determined to be invalid, inoperative, or contrary to any
existing or future law, the remainder of this Agreement shall be considered
valid and operative and effect shall be given to the intent manifested by the
portion held invalid or inoperative.
6. TERMINATION, AMENDMENT, MODIFICATION AND SUPPLEMENTATION
--------------------------------------------------------
This Agreement may be terminated, amended, modified or supplemented only by
the mutual written agreement of Indemnitor and the Indemnified Parties.
7. COUNTERPARTS
------------
This Agreement may be executed by the parties in any number of identical
counterparts, all of which together shall constitute a single binding agreement
between the parties. It shall not be necessary for any particular party to
execute the same counterpart for the various counterparts hereunder to
constitute a binding agreement.
8. GOVERNING LAW
-------------
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE
OF TEXAS.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective from the date first written above.
INDEMNITOR
ARCADIAN MANAGEMENT CORPORATION, a Colorado
corporation
By: /s/ William J. LaCroix
-----------------------------------------------
Authorized Officer
AGREEMENT AND CONSENT
---------------------
Petro Stopping Centers, L.P., Petro Holdings G.P. Corp., Petro Financial
Corporation and Petro, Inc. on behalf of themselves and their respective legal
representatives, successors, assigns, subsidiaries and past and present
officers, directors, agents and employees, as the Indemnified Parties under the
Amended and Restated Indemnity and Hold Harmless Agreement dated May 24, 1994,
which is amended and restated hereunder, hereby consent and agree to the various
amendments made hereunder to the Amended and Restated Indemnity and Hold
Harmless Agreement dated May 24, 1994.
PETRO STOPPING CENTERS, L.P., a
Delaware limited partnership
By: PETRO, INC., a Texas corporation, General
Partner
By: /s/ J. A. Cardwell
-----------------------------------------------
Authorized Officer
PETRO HOLDINGS G.P. CORP., a Delaware
corporation
By: /s/ Michael Shein
-----------------------------------------------
Authorized Officer
6
<PAGE>
PETRO FINANCIAL CORPORATION, a Delaware
corporation
By: /s/ Larry J. Zine
-----------------------------------------------
Authorized Officer
PETRO, INC., a Texas corporation
By: /s/ J. A. Cardwell
-----------------------------------------------
Authorized Officer
GUARANTY
--------
I, William J. La Croix, as the sole shareholder of the Indemnitor, in
consideration of the benefits accruing to me by operation of the foregoing
Second Amended and Restated Indemnity and Hold Harmless Agreement, hereby agree
and obligate myself to make the necessary contributions of cash and/or property
to the capital of Indemnitor, if any, for Indemnitor to bear the Economic Risk
of Loss with respect to the Indemnified Amount of the 1997 Debt Obligations as
required pursuant to Section 752 of the Code and the accompanying Treasury
Regulations thereto. All aforementioned capitalized terms shall have the same
definitions as specified in the foregoing Second Amended and Restated Indemnity
and Hold Harmless Agreement.
/s/ William J. LaCroix
--------------------------------------------
William J. La Croix
7
<PAGE>
EXHIBIT 10.50
- --------------------------------------------------------------------------------
INTEREST PURCHASE AGREEMENT
dated as of October 18, 1996
Between
Mobil Long Haul Inc., Petro Holdings GP Corp. and Petro Holdings LP Corp.
as Purchasers
and
Roadside, Inc., Sequoia Ventures Inc.,
and Petro Stopping Centers, L.P.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
PURCHASE AND SALE OF THE FREMONT INTERESTS
1.1 Definitions................................................... 2
1.2 Purchase and Sale............................................. 5
1.3 Consideration................................................. 5
1.4 Closing....................................................... 6
1.5 Purchase Price True-Up........................................ 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE FREMONT PARTNERS
2.1 Organization and Authority; Validity; No Conflict............. 8
2.2 Capitalization................................................ 10
2.3 Good Title.................................................... 10
2.4 No Brokers.................................................... 10
2.5 No Other Representations...................................... 10
2.6 Financial Statements.......................................... 10
2.7 Material Adverse Change....................................... 11
2.8 Omnibus Agreement............................................. 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Authority; Validity; No Conflict............. 11
3.2 Equity of the Company......................................... 13
3.3 SEC Reports; Financial Statements............................. 13
3.4 Undisclosed Liabilities....................................... 14
3.5 Absence of Certain Changes and Events......................... 14
3.6 Litigation; Injunctions....................................... 16
3.7 Government Authorizations and Permits; Compliance
with Applicable Laws........................................ 16
3.8 Real Property................................................. 17
3.9 Contracts..................................................... 17
3.10 Taxes......................................................... 18
3.11 Employment Matters............................................ 19
3.12 Employment, Severance and Termination Agreements, etc......... 20
3.13 Insurance..................................................... 21
3.14 Affiliated Party Transactions................................. 21
3.15 Environmental Matters......................................... 22
3.16 No Brokers.................................................... 23
3.17 No Other Representations...................................... 23
3.18 Assets........................................................ 23
3.19 Intangible Property........................................... 23
3.20 Franchises.................................................... 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.1 Accredited Investor........................................... 24
i
<PAGE>
4.2 Investment.................................................... 24
4.3 No Public Market.............................................. 25
4.4 Organization; Authority; Validity; No Conflict................ 25
4.5 Financing..................................................... 26
4.6 No Brokers.................................................... 27
4.7 No Other Representations...................................... 27
ARTICLE V
COVENANTS OF THE COMPANY AND THE FREMONT PARTNERS
5.1 Reasonable Efforts............................................ 27
5.2 No Solicitation............................................... 27
5.3 Further Assurances............................................ 28
5.4 Notice of Certain Events...................................... 28
5.5 Designated Employees.......................................... 28
5.6 1995 Class B Limited Partnership Interest Options............. 29
5.7 Partnership Agreement......................................... 29
5.8 Board of Control.............................................. 29
5.9 Conversion of General Partnership Interests................... 29
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Notice of Certain Events...................................... 29
6.2 Conduct of Business Prior to the Closing...................... 30
6.3 Access to Properties and Records.............................. 31
ARTICLE VII
COVENANTS OF THE PURCHASER
7.1 Consent Solicitation.......................................... 32
7.2 Reasonable Efforts............................................ 32
7.3 Further Assurances............................................ 32
7.4 Amendment to Omnibus Agreement................................ 33
7.5 Amendment to Partnership Agreement............................ 33
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 Environmental Assessment and Indemnification.................. 33
ARTICLE IX
TAX MATTERS
9.1 Cooperation................................................... 35
9.2 Closing Tax Return............................................ 36
9.3 Pre-Closing Date Tax Audits................................... 36
9.4 Purchase Price Allocation..................................... 37
9.5 Treatment of Purchaser Interest............................... 38
9.6 Transfer Taxes................................................ 38
ARTICLE X
ii
<PAGE>
CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
10.1 Conditions Precedent to the Obligations of the Purchasers... 38
10.2 Conditions Precedent to the Obligations of the Fremont
Partners.................................................... 41
10.3 Conditions Precedent to the Obligations of the Company...... 42
ARTICLE XI
TERMINATION OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
11.1 Termination of Representations and Warranties............... 43
11.2 Fremont Partners' Indemnification........................... 43
11.3 Purchasers' Indemnification................................. 44
11.4 Limitation.................................................. 44
11.5 Indemnity Procedure......................................... 44
ARTICLE XII
TERMINATION
12.1 Grounds for Termination..................................... 46
12.2 Effect of Termination....................................... 47
ARTICLE XIII
MISCELLANEOUS
13.1 Costs and Expenses.......................................... 47
13.2 Notices..................................................... 47
13.3 Counterparts................................................ 49
13.4 Entire Agreement............................................ 49
13.5 Captions.................................................... 49
13.6 Governing Law............................................... 50
13.7 No Third Party Rights....................................... 50
13.8 Amendment and Waiver........................................ 50
13.9 Construction and Representation by Counsel.................. 50
13.10 Further Assurances.......................................... 50
13.11 Severability................................................ 50
13.12 Binding Effect; No Assignment............................... 51
13.13 Company's Knowledge......................................... 51
13.14 Fremont's Knowledge......................................... 51
13.15 Specific Performance........................................ 51
13.16 Transactions Provided Hereby................................ 51
13.17 Joint and Several Liability................................. 51
13.18 Limitation of Liability..................................... 52
13.19 Fremont Cap................................................. 52
iii
<PAGE>
INTEREST PURCHASE AGREEMENT
---------------------------
This INTEREST PURCHASE AGREEMENT (the "Agreement"), made and entered
---------
into this 18th day of October, 1996, by and among Mobil Long Haul Inc., a
Delaware corporation and wholly-owned subsidiary of Mobil Corporation ("Mobil
-----
Co"), Petro Holdings GP Corp., a Delaware corporation and Petro Holdings LP
Corp., a Delaware corporation (collectively, "Chartwell Co" and together with
------------
Mobil Co, the "Purchasers"), Petro Stopping Centers, L.P., a Delaware limited
----------
partnership (the "Company"), Roadside, Inc., a Delaware corporation
-------
("Roadside"), and Sequoia Ventures Inc., a Delaware corporation ("SVI" and
-------- ---
together with Roadside, the "Fremont Partners").
----------------
WHEREAS, the Fremont Partners own a Partnership Interest (as defined in the
Partnership Agreement (defined hereinafter)) in its capacity as a general
partner in the Company (the "General Partnership Interest") and a Partnership
----------------------------
Interest in its capacity as a limited partner in the Company (the "Limited
-------
Partnership Interest" and together with the General Partnership Interest, the
- --------------------
"Fremont Interests"), which Partnership Interests include a one percent (1%)
-----------------
general partnership percentage interest and a forty-four point seventeen percent
(44.17%) limited partnership percentage interest in the profits, losses and
distributions of the Company;
WHEREAS, the Fremont Partners desire to sell to the Purchasers, and the
Purchasers desire to purchase from the Fremont Partners, in each case in the
manner and subject to the terms and conditions set forth in this Agreement, the
Fremont Interests;
WHEREAS, concurrently with the execution of this Agreement, each of
Chartwell Co and Mobil Co is depositing into escrow cash in an amount of
$500,000.00, which escrow shall be governed by the terms of the escrow agreement
being executed concurrently herewith, in each case, in order to secure the
obligations of the Purchasers hereunder; and
WHEREAS, the parties hereof are entering into this Agreement to provide for
such purchase and sale, and to establish certain rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, and
intending to be legally bound hereby, the parties hereby agree as follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE OF THE FREMONT INTERESTS
------------------------------------------
1.1 Definitions:
Defined in
Term Section
- ---- ----------
"Acquisition Proposal" 5.2
"Agreement" Preamble
"Amendments" 7.1
"Article VIII Remediation" 8.1(b)
"Assessments" 8.1(a)
"Balance Sheet Date" 3.4
"Balance Sheet" 3.4
"Benefit Plan" 3.11(a)
"Business Day" 1.4(a)
"Cap" 1.5(b)
"Chartwell Co" Preamble
"Claims" 9.6(a)
"Closing" 1.4(a)
"Closing Date" 1.4(a)
"Closing K-1" 8.2
"Commitment Letter" 4.5
"Company" Preamble
"Company Estimate" 1.5(b)
"Company Intangible Property" 3.20(a)
"Company Intangible Property Licenses 3.19(a)
"Consent Solicitation" 7.1
"Consent Solicitation Expenses" 7.1
"Confidentiality Agreements" 6.3(b)
"Coopers Determination" 1.5(a)
"Damages" 11.2
"Date of Notice of Claim" 11.5
"Debt Financing" 4.5
"Environmental Laws" 3.15(a)
"Equity Commitments" 4.5
"ERISA" 3.11(a)
"Exchange Act" 3.3
"Excess Contamination" 8.1(b)
"Fremont Interests" Recitals
"Fremont Material Adverse Effect" 2.1(a)
"Fremont Partners" Preamble
"General Partnership Interest" Recitals
"Governmental Authority" 2.1(a)
"Indemnitee" 11.5
"Indemnitor" 11.5
"Knowledge" 13.14 or 13.15
"Limited Partnership Interest" Recitals
"Material Contracts" 3.9
"Mobil Co" Preamble
"Notice of Claim" 11.5
2
<PAGE>
"Offer" 7.1
"Omnibus Agreement" 7.4
"Option Agreement" 5.6
"Partnership Agreement" 1.4(c)
"Permits" 3.1(a)
"Permitted Liens" 3.5(d)
"Person" 3.9(c)
"Petro" 5.9
"Petro Partners" 8.3
"Pre-Closing Period" 9.6(a)
"Pre-Closing Date Period" 9.2(a)
"Purchase Price" 1.3
"Purchasers" Preamble
"Purchaser Interest" 1.2
"Purchaser Material Adverse Effect" 4.4(c)
"Roadside" Preamble
"Schedule 3.9 Material Contracts" 3.9
"Schedule 3.11 Plan" 3.11(a)
"Schedule 3.12 Agreements" 3.12
"Schedule 3.13 Insurance Policies" 3.13
"Schillaci" 5.5
"SEC Reports" 3.3
"Subsidiaries" 3.1(a)
"SVI" Preamble
"Tax Matters Partner" 9.3
"Tax Returns" 3.10(a)
"Taxes" 3.10(a)
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company Material Adverse Effect" means a material adverse effect on the
-------------------------------
ability of the Company to consummate the transactions contemplated hereby or on
the business, results of operations or financial condition of the Company and
its Subsidiaries taken as a whole.
"Company Transaction Costs" means the costs and expenses to be paid by the
-------------------------
Company pursuant to Sections 5.5, 5.6, 8.1(a),(b) and (c) and fees to Goldman
Sachs in Section 3.16.
"Consent Solicitation Expenses" shall mean the actual out-of-pocket fees
-----------------------------
and expenses payable by the Purchasers to (i) Akin, Gump, Strauss, Hauer & Feld,
L.L.P., (ii) a solicitation agent, (iii) the indenture trustee and its counsel,
(iv) a printer selected by the Purchasers, if any, in each case related solely
to the Consent Solicitation in an aggregate amount not in excess of $200,000.
"Contracts" means all contracts, leases, agreements, commitments and other
---------
legally binding arrangements, whether oral or written, that relate to the
business or assets of the Company.
3
<PAGE>
"Employee Plan" means any employee benefit plan, as defined in section 3(3)
-------------
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
-----
(including, without limitation, defined benefit pension plans, defined
contribution pension plans, and medical and other welfare plans), and any
retirement, deferred compensation, medical, dental, cafeteria, stock purchase,
stock option, savings, severance, bonus, incentive, vacation, or other benefit
plan, arrangement, program, or arrangement, whether or not subject to ERISA,
whether written or oral, whether maintained for current employees, former
employees, or retirees, and whether currently in effect or terminated or frozen.
"Escrow Agent" means Citibank, N.A.
------------
"Escrow Agreement" means the Escrow Agreement, dated of even date herewith,
----------------
by and among the Purchasers, the Company and the Escrow Agent.
"GAAP" means generally accepted accounting principles in effect in the
----
United States of America at the time of determination, and which are
consistently applied.
"Hazardous Materials" means hazardous or toxic wastes, or chemicals,
-------------------
substances, constituents, pollutants, contaminants or regulated materials,
whether solids, liquids, or gases, regulated under the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. (S)(S) 9601-
9675; the Resource Conservation and Recovery Act, 42 U.S.C. (S)(S) 6901 -6992k;
the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 -2671; the Safe Drinking
Water Act, 42 U.S.C. (S)(S) 300f - 300j-11; the Clean Air Act, as amended, 42
U.S.C. (S)(S) 7401 - 7642; the Clean Water Act, 33 U.S.C. (S)(S) 1251 - 1387;
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S)
11001 -11050; or any analogous state laws.
"Liability" or "Liabilities" means all obligations, indebtedness,
--------- -----------
commitments, and other items constituting "liabilities" under GAAP, whether
direct or indirect, absolute, accrued, contingent, or otherwise, known or
unknown, or due or to become due, asserted or unasserted, matured or unmatured,
including without limitation trade accounts payable, accrued liabilities for
payroll and related expenses, obligations with respect to "self-insurance,"
obligations for borrowed money or for the deferred purchase price of property or
services, obligations secured by encumbrance on or with respect to any property
or assets owned by a Person or acquired by a Person subject thereto (whether or
not the obligation secured thereby shall have been assumed), obligations under
direct or indirect guarantees, other obligations (contingent or otherwise) to
purchase, to provide funds for payment or otherwise acquire property or to
assure a creditor against loss, obligations to
4
<PAGE>
reimburse the issuer with respect to letters of credit, liabilities in respect
of unfunded accrued vested benefits under any Employee Plan, capitalized lease
obligations and any other known or unknown obligations or liabilities.
"Notes" means the 12-1/2% Senior Notes due 2002.
-----
"Pension Plan" means an employee pension benefit plan as defined in
------------
Section 3(2) of ERISA.
"Warrants" means those certain Exchange Debt Warrants issued pursuant to
--------
that certain Warrant Agreement, dated as of May 24, 1994, among Petro PSC
Properties, L.P., Petro Financial Corporation and First Trust National
Association.
1.2 Purchase and Sale. Upon the terms and subject to the conditions
-----------------
of this Agreement, at the Closing (as defined hereinafter), the Fremont Partners
shall sell, convey, transfer and deliver to the Purchasers, and Chartwell Co
shall purchase, acquire and accept from Roadside, the General Partnership
Interest and Chartwell Co and Mobil Co shall purchase, acquire and accept from
SVI, 1.00% and 44.17% of the aggregate Limited Partnership Interest, such
interests being sold by the Fremont Partners to the Purchasers pursuant to this
Agreement shall be referred to herein as the "Purchaser Interest". The
------------------
aggregate consideration for the General Partnership Interest and the Limited
Partnership Interest shall be paid as provided in Section 1.3 hereof.
1.3 Consideration.
-------------
(a) The aggregate consideration for the Fremont Interests shall
consist of Twenty-eight Million Five Hundred Thousand U.S. Dollars ($28,500,000)
(as adjusted pursuant to Section 1.3(b), the "Purchase Price"), to be paid as
--------------
provided in Section 1.4 hereof.
(b) The Purchase Price shall be reduced at the Closing by an amount
equal to 45.17% of:
(i) every dollar by which the sum of (A) the aggregate cost
(including any premiums) to the Company of cancelling or retiring all
outstanding principal and interest relating to the indebtedness for
borrowed money of the Company other than the Notes and Warrants, plus
accrued but unpaid interest on the Notes as of the Closing Date, (B)
$105,538,000 and (C) the present value of the sum of (1) 3.57% multiplied
by $105,538,000 plus (2) interest of 1.5% per annum accruing from the
Closing Date to June 1, 1999 multiplied by $100,000,000, in each case,
discounted at 8.25% per annum computed for the period commencing at
5
<PAGE>
the Closing Date and ending on June 1, 1999, and (C) the Consent
Solicitation Expenses, including any sums paid to Noteholders to obtain
their consent pursuant to the Consent Solicitation, and all fees, costs and
expenses of the Company relating thereto (other than legal and accounting
fees within the limit set forth in the last sentence of Section 13.1
hereof), exceeds $173.0 million;
(ii) every dollar by which the trade accounts payable and
accrued expenses of the Company as of the Closing Date exceeds $42,429,000
(as estimated by the Company, as of the Closing Date and confirmed by
Coopers & Lybrand within 45 days following the Closing Date) pursuant to
agreed upon procedures in accordance with Section 1.5 hereof; and
(iii) the aggregate amount of the Company Transaction Costs.
1.4 Closing.
-------
(a) Subject to the conditions set forth in Article X, unless this
Agreement shall have been terminated pursuant to the provisions of Section 12.1
hereof, the closing (the "Closing") of the purchase and sale of the Fremont
-------
Interests shall take place at the offices of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1333 New Hampshire Avenue, N.W., Washington, D.C. on November 18, 1996
or, in the event that the conditions set forth in Article X will not have been
satisfied or waived by such date, on the fifth Business Day (as defined
hereinafter) following the date that each of the conditions set forth in Article
X will have been satisfied or waived, or at such other place and time as the
parties may mutually agree. "Business Day" shall mean a day other than a
------------
Saturday or a Sunday or other day on which commercial banks in New York City are
authorized or required by law to close. The date and time of such Closing are
herein referred to as the "Closing Date".
------------
(b) At the Closing, the Purchasers shall deliver the Purchase Price to
the Fremont Partners by wire transfer of immediately available funds to an
account designated in writing by the Fremont Partners.
(c) At the Closing, upon delivery of the Purchase Price, (i) the
Purchasers shall execute a counterpart to an amendment to the Second Amended and
Restated Limited Partnership Agreement of Petro Stopping Centers, L.P., dated as
of December 31, 1994 (the "Partnership Agreement"), admitting Chartwell Co to
---------------------
the Company as a substituted general partner and Chartwell Co and Mobil Co
substituted limited partners and terminating, to the fullest extent permitted by
law, all
6
<PAGE>
obligations of each of Roadside and SVI arising from each entity's status as
general partner and limited partner, respectively, in the Company, and (ii) the
Company shall take all necessary action required to admit the Petro Holdings GP
Corp to the Company as a substituted general partner and the other Purchasers as
substituted limited partners; provided, however, that, except as set forth
-------- -------
elsewhere in this Agreement, the Purchasers shall not be required to obtain
releases from third parties.
(d) At the Closing, Purchasers shall cause the Company, or pay at the
direction of the Company to a third Person or Persons, sufficient funds, by wire
transfer of immediately available funds, to enable the Company to effect the
cancellation or retirement of all indebtedness contemplated by Section 1.3(b)(i)
other than the Notes and the Warrants.
1.5 Purchase Price True-Up.
----------------------
(a) Within 45 days after the Closing, the Company shall cause Coopers
& Lybrand to complete their procedures with respect to confirmation of the
balances of trade accounts payable and accrued expenses at the Closing Date (the
"Coopers Determination").
---------------------
(b) If (i) the Company's estimate of the aggregate balance of trade
accounts payable and accrued expenses at the Closing (the "Company Estimate") is
----------------
less than $42,429,000 (the "Cap") and (ii) the Coopers Determination exceeds the
Cap, then the Purchase Price shall be reduced post-Closing by an amount equal to
45.17% of every dollar by which the Coopers Determination exceeds the Cap.
Within five business days following delivery of the Coopers Determination, the
Fremont Partners shall remit such amount to the Purchasers.
(c) If (i) the Company Estimate exceeds the Cap, and (ii) the Coopers
Determination exceeds the Company Estimate, then the Purchase Price shall be
reduced post-Closing by an amount equal to 45.17% of every dollar by which the
Coopers Determination exceeds the Company Estimate. Within five business days
after the delivery of the Coopers Determination, the Fremont Partners shall
remit such amount to the Purchasers.
(d) If (i) the Company Estimate exceeds the Cap and (ii) the Coopers
Determination is less than the Company Estimate but greater than the Cap, then
the Purchase Price shall be increased post-Closing by an amount equal to 45.17%
of every dollar by which the Company Estimate exceeds the Coopers Determination.
Within five business days of the delivery of the Coopers Determination, the
Purchasers shall remit such amount to the Fremont Partners.
7
<PAGE>
(e) If (i) the Company Estimate exceeds the Cap and (ii) the Coopers
Determination is less than or equal to the Cap, then the Purchase Price shall be
increased post-Closing by an amount equal to 45.17% of every dollar by which the
Company Estimate exceeds the Cap. Within five business days of the delivery of
the Coopers Determination, the Purchaser shall remit such amount to the Fremont
Partners.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE FREMONT PARTNERS
------------------------------------------------------
Each of Roadside and SVI hereby represents and warrants to the Purchasers
as follows:
2.1 Organization and Authority; Validity; No Conflict.
-------------------------------------------------
(a) Each of Roadside and SVI is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Roadside and SVI has all requisite power and authority to possess all
franchises, licenses, permits, consents, waivers, authorizations and approvals
from any nation or government, any state or other political subdivision thereof
and any entity (including without limitation a court, agency, department or
other instrumentality) exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, government ("Governmental
------------
Authority") necessary to enable it to use its name and to own, lease or
- ---------
otherwise hold its properties and assets and to carry on its business as
presently conducted and proposed to be conducted, except where the failure to
have such franchises, licenses, permits, consents, waivers, authorizations and
approvals would not, individually or in the aggregate, have a material adverse
effect on the ability of either Roadside or SVI to consummate the transactions
contemplated hereby or on the business, results of operations or financial
condition of either of Roadside or SVI, including, in the case of Roadside,
indirectly as a result of its being a general partner of the Company (a "Fremont
-------
Material Adverse Effect"). Each of Roadside and SVI is duly qualified to do
- -----------------------
business as a foreign corporation in each jurisdiction in which the nature of
its business or the ownership, leasing or holding of its properties or assets
requires qualification, except where the failure to be so qualified would not
have a Fremont Material Adverse Effect.
(b) Each of Roadside and SVI has the requisite power and authority
to enter into this Agreement and to carry out its obligations hereunder.
Neither the execution or delivery of this Agreement nor the consummation of the
transactions provided for hereby requires any further corporate action on the
part of either Roadside or SVI. This Agreement has been duly executed by each
of Roadside and SVI and, assuming due
8
<PAGE>
execution by the Purchasers, and the Company, is a legal, valid and binding
obligation of each of Roadside and SVI, enforceable against each of Roadside and
SVI in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in an action at law or a suit in equity).
(c) Except as set forth on Schedule 2.1(c), neither the execution and
delivery of this Agreement by either Roadside or SVI, nor the compliance by
either Roadside or SVI with or fulfillment of the terms and provisions hereof,
will:
(i) Conflict with or result in a breach of any provision of the
certificate of incorporation and by-laws or similar documents of either
Roadside or SVI;
(ii) Violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or require any consent
under, or give any right to terminate, modify or accelerate or to penalize
either Roadside or SVI, or result in the imposition of any Lien (as defined
hereinafter) upon or the creation of any security interest in any of the
assets of either Roadside or SVI under, any note, bond, mortgage,
indenture, deed of trust, permit, lease, contract, agreement or other
instrument, commitment or obligation to which either Roadside or SVI is a
party or by which its properties may be bound, other than (A) consents the
failure of which to obtain would not, individually or in the aggregate,
have a Fremont Material Adverse Effect and (B) violations, conflicts,
breaches, defaults, terminations, modifications, accelerations, penalties,
liens and security interests that would not, individually or in the
aggregate, have a Fremont Material Adverse Effect;
(iii) Violate any order, writ, injunction, decree, judgment,
ruling, law, rule or regulation of any Governmental Authority, applicable
to either Roadside or SVI or any of its properties, other than violations
that would not, individually or in the aggregate, have a Fremont Material
Adverse Effect; or
(iv) Require, on the part of either Roadside or SVI any order,
consent, approval or authorization of, or notice to, or declaration, filing
or registration with, any Governmental Authority, other
9
<PAGE>
than those the failure of which to obtain would not, individually or in the
aggregate, have a Fremont Material Adverse Effect.
2.2 Capitalization. Except as set forth in Schedule 2.2 hereto, (i)
--------------
there are no outstanding options, warrants, calls, rights, commitments or
agreements of any kind to which either Roadside or SVI is party or by which it
is bound relating to the sale, issuance or voting of, or the granting of rights
to acquire, the Fremont Interests or any securities convertible or exchangeable
into or evidencing the right to purchase the Fremont Interests or obligating the
Company to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement and (ii) the Fremont Interests outstanding on the date
hereof are not subject to any preemptive, first refusal or other subscription
rights.
2.3 Good Title. Except as set forth in the Partnership Agreement, each
----------
of Roadside and SVI owns beneficially and of record the General Partnership
Interest and the Limited Partnership Interest, respectively, free and clear of
all claims, charges, liens, security interests, pledges, restrictions or
encumbrances of any nature whatsoever (collectively, "Liens"). The transfer and
-----
delivery of the Fremont Interests to the Purchaser as contemplated by this
Agreement will, upon consummation of the Closing, transfer good and marketable
title thereto to the Purchaser, free and clear of all Liens.
2.4 No Brokers. Neither Roadside nor SVI has employed or is subject to the
----------
valid claim of, or incurred any liability that would be payable by either of
them, for any brokerage, finder's or other fees or commissions of any broker,
finder or other financial intermediary in connection with the transactions
contemplated by this Agreement.
2.5 No Other Representations. The Fremont Partners acknowledge that, except
------------------------
as set forth in Article IV, the Purchasers have made no representation or
warranty whatsoever to the Fremont Partners.
2.6 Financial Statements. Each of (i) the audited consolidated financial
--------------------
statements of the Company (including any related notes and schedules) included
(or incorporated by reference) in its Annual Report on Form 10-K for the fiscal
year ended December 29, 1995 (ii) the unaudited consolidated interim financial
statements for the Company (including any related notes and schedules) included
(or incorporated by reference) in its Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and (iii) the unaudited consolidated interim
financial statements for the Company (including any related notes and schedules)
included (or incorporated by reference) in its Quarterly Report on Form 10-Q for
the quarter ended September 30,
10
<PAGE>
1996, if filed by the Company prior to the Closing hereunder, fairly present or
will fairly present, in conformity with GAAP(except as may be indicated in the
notes thereto), the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in their financial position for the periods then ended
(subject to normal year-end adjustments and the absence of footnotes in the case
of any unaudited interim financial statements).
2.7 Material Adverse Change. To the Knowledge of Fremont Partners, since
-----------------------
June 30, 1996, except as set forth on Schedule 3.5 or as otherwise disclosed in
this Agreement or schedules hereto, there has occurred no Company Material
Adverse Effect.
2.8 Omnibus Agreement. In its capacity of general partner of the Company,
-----------------
Roadside has consented to the consummation of the transactions contemplated by
the Omnibus Agreement in accordance with its terms and has not modified or
withdrawn such consent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to the Purchasers as follows:
3.1 Organization and Authority; Validity; No Conflict.
-------------------------------------------------
(a) The Company is a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite power and authority to possess all franchises,
licenses, permits, consents, waivers, authorizations and approvals
(collectively, "Permits") from Governmental Authorities necessary to enable it
-------
to use its name and to own, lease or otherwise hold its properties and assets
and to carry on its business as presently conducted and to consummate the
transactions provided for hereby. The Company is duly qualified to do business
as a foreign entity in each jurisdiction in which the nature of its business or
the ownership, leasing or holding of its properties or assets requires
qualification. Each of the Subsidiaries of the Company is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, each with full corporate power and authority
to own, lease and operate the properties held or used by it and to carry on its
business as currently conducted. Attached hereto as Schedule 3.1(a) is a true,
correct and complete chart showing the
11
<PAGE>
corporations and partnerships in which the Company owns, directly or indirectly,
any equity interest. For purposes of this Agreement, "Subsidiaries" means each
corporation and partnership in which the Company owns, directly or indirectly,
50 percent or more of the voting stock or other equity interest and each other
corporation and partnership that the Company controls or has the ability to
control.
(b) The Company has the requisite power and authority to enter into
this Agreement and to carry out its obligations hereunder. Neither the
execution or delivery of this Agreement nor the consummation of the transactions
provided for hereby requires any further partnership action on the part of the
Company. This Agreement has been duly executed by the Company and, assuming due
execution by the Purchasers, Roadside and SVI, is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in an
action at law or a suit in equity).
(c) Except as set forth on Schedule 3.1(c), neither the execution and
delivery of this Agreement by the Company, nor the compliance by the Company
with or fulfillment of the terms and provisions hereof, nor the consummation of
the transactions provided for hereby, will:
(i) Conflict with or result in a breach of any provision of the
Partnership Agreement;
(ii) Violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or require any consent
under, or give any right to terminate, modify or accelerate or to penalize
the Company or its Subsidiaries, or result in the imposition of any Lien
upon or the creation of any security interest in any of the assets of the
Company or its Subsidiaries under, any note, bond, mortgage, indenture,
deed of trust, Permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or its Subsidiaries is a
party or by which its properties may be bound;
(iii) Violate any order, writ, injunction, decree, judgment,
ruling, law, rule or regulation of any Governmental Authority, applicable
to the Company or any of its Subsidiaries or any of their properties; or
12
<PAGE>
(iv) Require, on the part of the Company or any of its
Subsidiaries any order, consent, approval or authorization of, or notice
to, or declaration, filing or registration with, any Governmental
Authority.
3.2 Equity of the Company.
---------------------
(a) Set forth in Schedule 3.2(a) is a true and complete list of the
general partners and limited partners and their respective percentage interests
in the Company as of the date hereof. Except (i) as set forth in the Partnership
Agreement, (ii) the Warrants as listed on Schedule 3.2(a) and (iii) options
listed on Schedule 3.2(a) issued pursuant to the Petro Stopping Centers, L.P.
1995 Class B Limited Partnership Interests Option Plan effective July 15, 1995,
there are no outstanding warrants, options, rights, securities, agreements,
subscriptions, antidilution rights, first refusal rights or other commitments
pursuant to which the Company is or may become obligated to issue, deliver or
sell any additional interests in the Company or any of its Subsidiaries or to
issue, grant, extend or enter into any such warrant, option, right, security,
agreement, subscription or other commitment.
(b) The Fremont Interests are duly authorized, validly issued, fully
paid and nonassessable.
3.3 SEC Reports; Financial Statements. The Company has delivered to the
---------------------------------
Purchasers true and complete copies of each registration statement and report
and any other document (including exhibits and any amendments thereto) filed by
the Company with the Securities and Exchange Commission since May 17, 1994
(collectively, the "SEC Reports"), which are all the documents (other than
-----------
preliminary materials) that the Company has been required to file with the SEC
since such date. As of the respective dates the SEC Reports were filed or, if
any such SEC Reports were amended, as of the date such amendment was filed, each
of the SEC Reports (i) complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended and Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
------------
promulgated thereunder; (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of (i) the audited consolidated
financial statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Report on Form 10-K for
the fiscal year ended December 29, 1995; (ii) the unaudited consolidated interim
financial statements for the Company (including any related notes and schedules)
included (or incorporated by reference) in its Quarterly Report on Form 10-Q for
the
13
<PAGE>
quarter ended June 30, 1996; and (iii) the unaudited consolidated interim
financial statements for the Company (including any related notes and schedules)
included (or incorporated by reference) in its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996, if filed by the Company prior to the
Closing hereunder, fairly present or will fairly present, in conformity with
GAAP (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its subsidiaries as of the dates thereof
and the consolidated results of their operations and changes in their financial
position for the periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements).
3.4 Undisclosed Liabilities.
-----------------------
(a) Neither the Company nor its Subsidiaries has any Liabilities,
whether accrued, absolute or contingent, and whether due or to become due, which
are of a type required to be reflected on, or described in a footnote to, an
audited consolidated balance sheet prepared under GAAP, practices and methods
applicable to it, except (i) to the extent specifically disclosed or provided
for in the consolidated balance sheet of the Company for the period ended June
30, 1996 (the "Balance Sheet"), (ii) incurred since the date of the Balance
-------------
Sheet (the "Balance Sheet Date") in the ordinary and usual course of business
------------------
consistent with past practices or, (iii) as set forth on Schedule 3.4.
(b) To the Knowledge of the Company, neither the Company nor its
Subsidiaries has any Liabilities in excess of $100,000, individually, or
$250,000, in the aggregate, whether accrued, absolute or contingent, and whether
due or to become due, whether or not of a type required to be reflected on, or
described in a footnote to, an audited consolidated balance sheet prepared under
the GAAP, practices and methods applicable to it, except (i) to the extent
specifically disclosed or provided for in the Balance Sheet, (ii) incurred since
the Balance Sheet Date in the ordinary and usual course of business, (iii) as
set forth on Schedule 3.4 or (iv) as otherwise disclosed in this Agreement or
the Schedules hereto.
3.5 Absence of Certain Changes and Events. Except as set forth on Schedule
-------------------------------------
3.5, from the Balance Sheet Date each of the Company and its Subsidiaries has
conducted its business only in the ordinary and usual course and has not
undergone or suffered or become aware of any event, occurrence, development, or
state of circumstances or fact which has had or would reasonably be expected to
have a Company Material Adverse Effect. Without limiting the generality of the
first sentence of this Section 3.5 (and except as set forth on Schedule 3.5 or
as otherwise disclosed in or permitted or required by this Agreement
14
<PAGE>
or Schedules hereto), since the Balance Sheet Date neither the Company nor any
of its Subsidiaries has:
(a) Authorized for issuance, issued, delivered or sold any debt or
equity securities, or altered the terms of any outstanding securities issued by
it, or increased its indebtedness for borrowed money other than in the ordinary
and usual course of business;
(b) Made or set aside for making any distribution (whether in cash,
interests or property or otherwise) in respect of any partnership or other
interest, or redeemed, purchased or otherwise acquired any such partnership or
other interests, any securities convertible into or exchangeable for such
partnership or other interests or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
(c) Paid, discharged or satisfied any Liability or obligation (whether
accrued, absolute, contingent or otherwise) other than the payment, discharge or
satisfaction, in the ordinary and usual course of business, of Liabilities or
obligations shown or reflected on the financial statements included in the SEC
Reports or incurred in the ordinary and usual course of business;
(d) Except in the ordinary and usual course of business, permitted or
allowed any assets (whether real, personal or mixed, tangible or intangible) to
be subjected to any Lien except (i) Liens disclosed on the Schedules hereto and
(ii) (A) mechanics', carriers', workmen's, repairmen's, and other like liens
arising or incurred in the ordinary course of business, (B) liens for Taxes,
assessments and other governmental charges that are not yet due and payable or
that may thereafter be paid without penalty, or that are being contested in good
faith by appropriate proceedings (which liens are set forth in Schedule 3.5) and
(C) imperfections of title and other encumbrances that, individually or in the
aggregate, are not substantial in character or amount and do not, except in
immaterial respects, detract from, or interfere with the Company's business as
presently conducted (the Liens described in clauses (i) and (ii) being herein
referred to as "Permitted Liens");
---------------
(e) Written off as uncollectible any notes or accounts receivable
other than in immaterial amounts or in the ordinary and usual course of
business;
(f) Cancelled or waived any claims or rights of value or sold,
transferred, distributed or otherwise disposed of any assets except in the
ordinary and usual course of business;
15
<PAGE>
(g) Granted any increase in the compensation of any member of the
Board of Control, management committee member, officer or employee, whether now
or hereafter payable (other than increases in compensation in the ordinary and
usual course of business and consistent in timing and amount with past practice)
or granted any severance or termination pay (other than for severance pay in
amounts consistent with its established severance pay practices), or entered
into or varied the terms of any employment agreement (other than employment
agreements terminable at will without any liability other than severance
consistent with its established severance policies) with any such person or
adopted, amended in any material respect or terminated (except in the ordinary
and usual course of business and consistent with past practice) any Schedule
3.12 Plan (as defined in Section 3.12 hereof), non-ERISA arrangement, bonus,
profit sharing or other employee benefit plan, agreement or arrangement of
general applicability for the benefit of its members of the Board of Control,
management committee members, officers or employees or for the benefit of
members of the Board of Control, management committee members, officers or
employees of any of its affiliates;
(h) Other than as provided in the Company's 1996 capital expenditure
plan previously provided to the Purchaser, made any capital expenditure or
commitment for additions to property or equipment, or leased or agreed to lease
any assets in excess of $250,000 individually or in the aggregate, or made any
advance or capital contributions to, or investment in, any Person (other than to
wholly-owned subsidiaries);
(i) Made any material change in any method of accounting or keeping
its books of account or accounting practices, except as required as a result of
changes in GAAP;
(j) Incurred any material obligation or Liability, except Liabilities
incurred in the ordinary and usual course of business; or
(k) Prior to the date hereof, experienced any damage, destruction, or
other casualty loss (whether or not covered by insurance) detrimental to the
business or assets of the Company or any facility.
3.6 Litigation; Injunctions. As of the date hereof, except as set forth on
-----------------------
Schedule 3.6, (i) there is no lawsuit, claim, arbitration or other proceeding or
investigation or review pending or, to the Knowledge of the Company, threatened
by or against the Company, its Subsidiaries, or their properties or assets; and
(ii) there is no outstanding judgment, order or decree of any Governmental
Authority or arbitrator applicable to
16
<PAGE>
the Company, its Subsidiaries or any of their properties, assets or business.
3.7 Government Authorizations and Permits; Compliance with Applicable Laws.
----------------------------------------------------------------------
The Company and each of its Subsidiaries hold all authorizations and permits
necessary or required for the conduct of its business, which authorizations and
permits are set forth in Schedule 3.7. All such authorizations and permits are
valid and in full force and effect, and no proceeding is pending, or, to the
Knowledge of the Company threatened, to modify, suspend, revoke or otherwise
limit any of such authorizations and permits and no administrative or
governmental actions have been taken or, to the Knowledge of the Company are
threatened, in connection with the expiration or renewal of any of such
authorizations and permits. The Company and its Subsidiaries are conducting its
business, in compliance with all applicable laws.
3.8 Real Property. Schedule 3.8 is a complete list of all real property,
-------------
leaseholds, options to purchase and rights of first refusal and other interests
in real property owned, leased or used by the Company or its Subsidiaries for or
in the conduct its business. Each of the Company and its Subsidiaries has good
and marketable title in fee simple to all real property and interests in real
property and leasehold interests identified on Schedule 3.8 to be owned by it,
free and clear of all Liens other than the following: (i) Liens disclosed on
Schedule 3.8 and (ii) (A) Permitted Liens, (B) easements, covenants, rights-of-
way and other encumbrances or restrictions of record, (C) zoning, building and
other similar restrictions, and (D) unrecorded easements, covenants, rights-of-
way or other restrictions, none of which unrecorded items materially impair the
current use of the property to which they relate. The Company is the lessee of
all the leasehold estates purported to be granted by the leases shown on
Schedule 3.8 which is a complete and correct list of all leases in which Company
or any of its Subsidiaries has an interest and is in possession of the premises
purported to be leased thereunder. There are no events or proceedings affecting
any such property pending, or to the Knowledge of the Company, threatened, which
would reasonably be expected to detract from the value of such property or
impair its existing use except as otherwise disclosed in Section 3.15 hereof.
3.9 Contracts. Schedule 3.9 and Schedule 3.20 set forth a list of all of
---------
the agreements, contracts and arrangements to which the Company or any of its
Subsidiaries is a party or by which its assets or properties are bound or
affected as of the date of this Agreement and which are material to the conduct
of the Company's or its Subsidiaries' business including, without limitation,
agreements relating to capital expenditures or the acquisition of tangible or
intangible property (other than in connection with such investments) under which
the Company or any of its Subsidiaries is obligated to pay in excess of
$100,000, or
17
<PAGE>
which have a term greater than one year (such agreements, contracts and
arrangements, the "Material Contracts"). As of the date of this Agreement:
------------------
(a) each Material Contract is valid and in full force and effect and
is enforceable in accordance with its terms against the Company or any of its
Subsidiaries, as applicable, and against any Person party to such contract;
(b) except as disclosed on Schedule 3.9, no default or event of
default has occurred and, to the Knowledge of the Company, there exists no
condition or event which, after notice or lapse of time or both, would
constitute a default by the Company or any of its Subsidiaries, as applicable,
under such Material Contract, or would give to any other Person (as defined
below) any rights of termination, cancellation or acceleration of any
performance required thereunder or result in the creation of any Lien; and
(c) to the Knowledge of the Company, none of the other parties to the
Material Contracts is in default thereunder, nor is the Company or any of its
Subsidiaries aware of any event which, with the passage of time, the giving of
notice or both, would constitute a default under such Material Contract by such
other party. For purposes of this Agreement, "Person" shall mean any individual,
------
partnership, corporation (including a business trust), joint stock company,
trust, unincorporated association, joint venture or other entity (including,
without limitation, any government or political subdivision or any agency,
department or instrumentality thereof).
3.10 Taxes. Except as set forth in Schedule 3.10 hereto:
-----
(a) All Taxes relating to the Company's business or to any of its
wholly owned subsidiaries that are incurred by the Company or by any of its
wholly owned subsidiaries and that are due and payable by the Company or by any
of its wholly owned subsidiaries prior to or as of the Closing Date have been
duly paid, or adequate reserves have been established with respect thereto in
accordance with GAAP.
(b) The Company and each of its wholly owned subsidiaries have timely
filed, or will file or cause to be timely filed, all Tax Returns required by
applicable law to be filed by them prior to or as of the Closing Date. All such
Tax Returns are or will be true, complete, and correct in all material respects.
(c) There is no claim or assessment for Taxes pending or threatened
against the Company or any of its wholly
18
<PAGE>
owned subsidiaries, and the Company does not know of any audit or investigation
with respect to any Taxes due from the Company or any of its wholly owned
subsidiaries. There are no agreements in effect to extend the period of
limitations for the assessment or collection of any Taxes for which the Company
or any of its wholly owned subsidiaries may be liable.
(d) At no time during its existence has any of the Company's wholly
owned subsidiaries been a member of an affiliated group of corporations as
defined in section 1504 of the Code.
(e) There are no liens for Taxes upon any of the assets of the Company
or its wholly owned subsidiaries, except for statutory liens for current Taxes
not yet due.
(f) For purposes of this Agreement, the following definitions shall
apply:
"Taxes" shall mean all Federal, state, local and foreign taxes, and other
-----
assessments of a similar nature (whether imposed directly or through
withholding), including fuel and employment related taxes, and any interest,
additions to tax, or penalties applicable thereto, but excluding any liability
relating to any Benefit Plan (as defined below).
"Tax Returns" shall mean all Federal, state, local and foreign Tax returns,
-----------
declarations, statements, reports, schedules, forms and information returns and
any amendments thereto.
3.11 Employment Matters.
------------------
(a) Schedule 3.11(a) sets forth a true and complete list of each plan,
program, arrangement, agreement or commitment which is an employment, consulting
or deferred compensation agreement, or an executive compensation, incentive
bonus or other bonus, employee pension, profit-sharing, savings, retirement,
severance pay, life, health, disability or accident insurance plan, or vacation,
or other employee benefit plan, program, arrangement, agreement or commitment,
including, without limitation, any Employee Plan (each such plan, a "Benefit
-------
Plan"), that is maintained by the Company or any Person for the benefit of
- ----
persons in their capacities as members of the Board of Control, management
committee members, officers or employees of the Company and its Subsidiaries and
any organization which is a member of a controlled group of organizations within
the meaning of Code section 414(b) or (c) (an "ERISA Affiliate") (each such
---------------
Benefit Plan, a "Schedule 3.11 Plan").
------------------
(b) Except as set forth in Schedule 3.11(b), with respect to each
Schedule 3.11 Plan, (i) the Company and any
19
<PAGE>
ERISA Affiliate has complied with, and each such Schedule 3.11 Plan complies
with, currently applicable provisions of all applicable laws (including, without
limitation and to the extent applicable, ERISA and the Code), and (ii) there are
no actions, suits or claims pending (other than routine claims for benefits) or,
to the Knowledge of the Company, threatened with respect to such Schedule 3.11
Plan or against the assets of such Schedule 3.11 Plan.
(c) Except pursuant to the Schedule 3.11 Plans listed in Schedule
3.11(c), no Schedule 3.11 Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured) with respect to
any current or former employee of the Company and any ERISA Affiliate beyond
their retirement or other termination of service (other than (i) coverage
mandated by applicable law, (ii) retirement or death benefits under any
employee pension plan, (iii) disability benefits under any employee welfare
plan that have been fully provided for by insurance or otherwise, (iv) deferred
compensation benefits accrued as liabilities on the books of the Company or (v)
benefits in the nature of severance pay).
(d) Except as set forth in Schedule 3.11(d), with respect to each
Schedule 3.11 Plan that is funded wholly or partially through an insurance
policy, all premiums required to have been paid to date under the insurance
policy have been paid, all premiums required to be paid under the insurance
policy through the Closing Date will have been paid on or before the Closing
Date and, as of the Closing Date, there will be no liability of the Company and
any ERISA Affiliate under any such insurance policy or ancillary agreement with
respect to such insurance policy in the nature of a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability arising wholly
or partially out of events occurring prior to the Closing Date.
(e) No Schedule 3.11 Plan is subject to Title IV of ERISA, section 302
of ERISA or section 412 of the Code.
(f) Neither the Company nor any ERISA Affiliate has maintained or
contributed to any Employee Plan which is "a multiemployer plan" as defined in
section 3(37) of ERISA which covers, is maintained for the benefit of or relates
to any Person in his or her capacity as an employee of the Company or any ERISA
Affiliate.
(g) The Company is not a party to any collective bargaining agreement.
There is no labor strike, dispute, slowdown or stoppage actually pending or, to
the Knowledge of the Company, threatened against or involving the Company or any
of its Subsidiaries.
20
<PAGE>
3.12 Employment, Severance and Termination Agreements, etc. Schedule 3.12
-----------------------------------------------------
lists all employment, severance, "golden parachute" or termination or
compensation agreements, arrangements or understandings of the Company or any of
its Subsidiaries with any present member of the Board of Control, management
committee member, officer, employee, consultant or group of employees of the
Company or any of its Subsidiaries, other than agreements terminable by the
Company or any of its Subsidiaries at will without expense or liability to the
Company or any of its Subsidiaries (except for customary severance payments in
accordance with existing practices) ("Schedule 3.12 Agreements"). Except as
------------------------
indicated on Schedule 3.12, none of the Schedule 3.12 Agreements provides for
payments by the Company or any of its Subsidiaries in connection with the sale
of the Fremont Interests and no amount will become due from the Company or any
of its Subsidiaries to any employee, consultant, officer, management committee
member or member of the Board of Control of the Company or any of its
Subsidiaries as a result of the transactions contemplated by this Agreement.
3.13 Insurance. The Company and its Subsidiaries have or have made
---------
provision for, usual and customary insurance coverage through October 31, 1996
and have made or will make provision for renewal of such coverage through the
Closing Date. Set forth on Schedule 3.13 is a true and complete list of all
insurance policies and their respective initial dates of coverage to the extent
they are for the benefit of or relate to the Company or any of its Subsidiaries
or their employees (the "Schedule 3.13 Insurance Policies") listing (to such
--------------------------------
extent) (i) the name of the insurer with which such policy is carried, (ii) the
annual premium payable thereunder, (iii) a brief description of the categories
of liabilities covered thereunder and (iv) the amount of coverage and
deductibles thereunder. None of the Schedule 3.13 Insurance Policies is in
default, and neither the Company nor any of its Subsidiaries has failed to give
any notice or present any claim thereunder in due or timely fashion or as
required by any of such Schedule 3.13 Insurance Policies so as to jeopardize
full recovery under the Schedule 3.13 Insurance Policies. Except as set forth in
Schedule 3.13, no amount is owing by the Company under any Schedule 3.13
Insurance Policy for the benefit of any Subsidiary or affiliate. Prior to the
date hereof, no pending claim by the Company under any policy in excess of
$100,000, individually or in the aggregate, has been questioned or disputed, nor
has any insurer reserved any rights with respect to any such claims. Except as
set forth in Schedule 3.13, as of the date hereof, there are no claims by the
Company pending under any Schedule 3.13 Insurance Policies in excess of
$100,000, individually, or $250,000 in the aggregate.
3.14 Affiliated Party Transactions. Except as set forth on Schedule 3.14,
-----------------------------
no contracts or agreements are in effect
21
<PAGE>
as of the date hereof between (i) on the one hand, the Company or its
subsidiaries and (ii) on the other hand, any of its partners or their respective
affiliates. For purposes of this Section 3.14 an "affiliate" of any Person shall
mean any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person. For the purposes of
this definition, "control", when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings that correspond to
the foregoing.
3.15 Environmental Matters. Except as set forth in Schedule 3.15, to the
---------------------
Knowledge of the Company:
(a) the Company and each of its Subsidiaries is in compliance with all
federal, state, and local laws, rules, regulations and ordinances governing
pollution or the protection of human health or the environment ("Environmental
-------------
Laws");
- ----
(b) neither the Company nor any of its Subsidiaries has received any
written notice, pursuant to which it is reasonably likely that the Company or
any of its subsidiaries may be required to pay an amount in excess of $100,000,
individually, or $250,000, in the aggregate, that remains pending or outstanding
with respect to the business of, or any property now or formerly owned or leased
by, the Company or any of its subsidiaries from any Governmental Authority or
third party alleging that the Company or any of its Subsidiaries is not in
compliance with any Environmental Law;
(c) there has been no release of a Hazardous Material, other than
releases permitted under federal, state or local laws or regulations, in excess
of a reportable quantity on any real property now or formerly owned or leased by
the Company or any of its subsidiaries during such time, with respect to the
Company's or any subsidiaries formerly owned or leased properties, used for the
business of the Company or any of its subsidiaries, and neither the Company nor
any of its subsidiaries has received any notice of actual or potential liability
for any such release, pursuant to applicable Environmental Laws for Hazardous
Materials sent to off-site locations from any real property now or formerly
owned or leased by the Company or any of its subsidiaries during such time as
such property was used for the business of the Company or any of its
subsidiaries;
(d) there is no response or remediation or other similar corrective
action, or related investigation, by the Company or any of its subsidiaries
pursuant to any Environmental Law or under the direction of any Governmental
Authority currently being performed or that has been performed or has been
22
<PAGE>
required by any Governmental Authority to be performed by the Company or any of
its Subsidiaries at any real property now or formerly owned or leased by the
Company or any of its subsidiaries for the business of the Company during the
last of its two (2) years in connection with Hazardous Materials; and
(e) there are no underground or above-ground storage tanks at any real
property owned by the Company or its Subsidiaries or otherwise owned by the
Company or any of its Subsidiaries or, in the case of leased property, used
currently or previously, by the Company or any subsidiaries.
3.16 No Brokers. The Company has not employed any broker or finder or
----------
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement except for
Goldman, Sachs & Co. (whose fees and expenses have been previously disclosed in
writing to the Purchasers).
3.17 No Other Representations. The Company acknowledges that, except as set
------------------------
forth in Article IV and the Partnership Agreement, the Purchasers have made no
representation or warranty whatsoever to the Company.
3.18 Assets. Except as set forth in Schedule 3.18, the Company and its
------
Subsidiaries own or have the right to use all assets necessary to permit the
Company and its Subsidiaries to conduct their business as it is currently being
conducted, and the assets of the Company and its Subsidiaries have been
adequately maintained in accordance with industry standards and are in good
repair, reasonable wear and tear excepted.
3.19 Intangible Property.
-------------------
(a) Schedule 3.19 sets forth a list of each material trademark, trade
name, patent, service mark, computer program (other than readily available off-
the-shelf programs) and copyright of the Company and its Subsidiaries as well as
a list of all registrations thereof and pending applications therefor, and each
material license or other contract relating thereto (collectively, the "Company
-------
Intangible Property"). Other than the trademarks and service marks listed on
- -------------------
Schedule 3.19, the Company owns no material intellectual property which is
necessary to permit the Company and its Subsidiaries to conduct their business
as is currently being conducted. Except as set forth in Schedule 3.19, all of
the Company Intangible Property set forth on Schedule 3.19 is owned by the
Company or its Subsidiaries free and clear of any and all Liens, other than
Permitted Liens. Except as set forth in Schedule 3.19, the use of the Company
Intangible Property set forth on Schedule 3.19, and to the Knowledge of the
Company, the use of Company Intangible Property other than the Company
Intangible Property set forth on Schedule
23
<PAGE>
3.19, by the Company or its Subsidiaries does not infringe upon any intellectual
property right, including, without limitation, any trademark, trade name,
patent, service mark, computer program, or copyright of any other Person and
neither the Company nor any of its Subsidiaries has received any notice of any
claim that any of the Company Intangible Property is invalid or unenforceable or
violates or infringes upon the rights of any other Person and none of the
Company Intangible Property has been abandoned, cancelled or rendered
unenforceable.
(b) Each of the Company and its Subsidiaries owns, or has a valid
right to use, all Company Intangible Property necessary for the operation of its
respective business.
(c) Except as set forth in Schedule 3.19, each of the material
licenses or other Contracts relating to the Company Intangible Property
(collectively, the "Company Intangible Property Licenses") is in full force and
------------------------------------
effect and is valid and enforceable in accordance with its terms, and there is
no default under any Company Intangible Property License either by the Company
or any of its Subsidiaries or, to the Knowledge of the Company, by any other
party thereto and there has been no failure to maintain or enforce any Company
Owned Intangible Property.
3.20 Franchises. Schedule 3.20 contains a list of all franchisees with whom
----------
the Company or any of its Subsidiaries has franchise agreements, and all such
franchise agreements and other contracts with such franchisees, each of which
agreement, except as otherwise set forth in Schedule 3.20, is a written
agreement. Except as set forth in Schedule 3.20, all contracts, agreements and
commitments set forth in Schedule 3.20 are valid, binding and enforceable and in
full force and effect and neither the Company or any of its Subsidiaries, nor to
the Knowledge of the Company or any of its Subsidiaries, any other party thereto
has breached any provision thereof nor is the Company or any of its
Subsidiaries, to the Knowledge of the Company, any other party thereto in
default thereunder in any material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
------------------------------------------------
Each of the Purchasers hereby represents and warrant(s), jointly and
severally, to the Fremont Partners and the Company as follows:
4.1 Accredited Investor. Each Purchaser is an "accredited investor" as such
-------------------
term is defined in Regulation D under the Securities Act.
24
<PAGE>
4.2 Investment. Each Purchaser is acquiring the Purchaser Interest
----------
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof in violation
of the Securities Act. Each Purchaser understands that the Purchaser Interest
to be purchased has not been, and will not be registered under the Securities
Act by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of each Purchaser's
representations as expressed herein. Each Purchaser understands and
acknowledges that the Purchaser Interest is subject to restrictions on transfer
pursuant to the terms of the Partnership Agreement.
4.3 No Public Market. Each Purchaser understands that no public
----------------
market now exists for the Fremont Interests and acknowledges that the Purchaser
Interest must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. Each
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resales of securities purchased in a private
placement, subject to the satisfaction of certain conditions, and that there can
be no assurance that Rule 144 or any other exemption from the registration
requirements of the Securities Act will ever be available for resales of the
Purchaser Interest.
4.4 Organization; Authority; Validity; No Conflict.
----------------------------------------------
(a) Each Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Purchaser has full corporate power and authority to own,
lease and operate the properties held or used by it and to carry on its business
as currently conducted and to consummate the transactions provided for hereby.
(b) Each Purchaser has the corporate power and authority to enter
into this Agreement, and to carry out its obligations hereunder. Neither the
execution or delivery of this Agreement nor the consummation of the transactions
provided for hereby requires any further corporate action on the part of any of
the Purchasers. This Agreement has been duly executed by each Purchaser and,
assuming due execution by each of Roadside, SVI and the Company, is a legal,
valid and binding obligation of the Purchaser, enforceable against each
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in an action at law or a suit in equity).
25
<PAGE>
(c) Neither the execution and delivery of this Agreement by any
of the Purchasers, nor the consummation by any of the Purchasers of the
transactions contemplated hereby, nor compliance by any of the Purchasers with
or fulfillment of the terms and provisions hereof, nor the consummation of the
transactions provided for hereby, will:
(i) Conflict with or result in a breach of any provision of
the charter, bylaws or similar documents of any of the Purchasers;
(ii) Violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or require any consent
under, or give any right to terminate, modify or accelerate or to penalize
any of the Purchasers or result in the imposition of any Lien upon or the
creation of any security interest in any of the assets of any of the
Purchasers, under, any note, bond, mortgage, indenture, deed of trust,
permit, lease, contract, agreement or other instrument, commitment or
obligation to which any of the Purchasers is a party or by which its
properties may be bound, other than (A) consents the failure of which to
obtain would not, individually or in the aggregate, have a material adverse
effect on the ability of any of the Purchasers to consummate the
transactions contemplated hereby or, following the Closing, on the
business, results of operation or financial condition of any of the
Purchasers (a "Purchaser Material Adverse Effect") and (B) violations,
---------------------------------
conflicts, breaches, defaults, terminations, modifications, accelerations,
penalties, liens and security interests which would not, individually or in
the aggregate, have a Purchaser Material Adverse Effect;
(iii) Violate any order, writ, injunction, decree, judgment,
ruling, law, rule or regulation of any court or Governmental Authority,
applicable to any of the Purchasers or any of its properties, other than
violations which would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect; or
(iv) Require, on the part of any of the Purchasers any
order, consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any Governmental Authority, other than those
which shall have been obtained on or before the Closing Date or the failure
of which to obtain
26
<PAGE>
would not, individually or in the aggregate, have a Purchaser Material
Adverse Effect.
4.5 Financing. In order to pay the Purchase Price required by
---------
Section 1.3 (a), the cancellation or repurchase of indebtedness contemplated by
Section 1.3(b)(i) and other costs associated with the transactions contemplated
hereby and with the operation of the Company after the Closing Date, the
Purchasers have (i) commitments for equity financing in an amount equal to
$35.73 million (the "Equity Commitments"), with no conditions attached to such
------------------
commitments other than satisfaction of the conditions to the Purchaser's
obligations under this Agreement set forth in Section 10.1 and (ii) obtained a
letter from the Bank of Boston, a true and correct copy of which, dated October
17, 1996 has been previously provided to the Fremont Partners (the "Commitment
----------
Letter"). The financing proposed in such letter is referred to herein as the
- ------
"Debt Financing." The Equity Commitments together with the Debt Financing are
sufficient to pay the Purchase Price, the cancellation or retirement of
indebtedness contemplated by Section 1.3(b)(i) and other costs associated with
the transactions contemplated hereby and with the operation of the Company after
the Closing Date. The Purchasers do not know of any event or occurrence as a
result of which any of the conditions to the availability of the Debt Financing,
set forth in the Commitment Letter or otherwise, would not be satisfied.
4.6 No Brokers. The Purchasers have not employed any broker or
----------
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this
Agreement.
4.7 No Other Representations. Each Purchaser acknowledges that,
------------------------
except as set forth in (i) Article II, the Fremont Partners have not made
any representation or warranty whatsoever to any of the Purchasers and (ii)
Article III, the Company has not made any representation or warranty
whatsoever to any of the Purchasers.
ARTICLE V
COVENANTS OF THE COMPANY AND THE FREMONT PARTNERS
-------------------------------------------------
5.1 Reasonable Efforts. Each of the Company and the Fremont Partners
------------------
shall use all commercially reasonable efforts to satisfy the conditions to
Closing set forth in Section 10.1 of this Agreement and otherwise to consummate
the transactions contemplated by this Agreement as expeditiously as possible.
5.2 No Solicitation. Neither the Company nor the Fremont
---------------
Partners shall directly or indirectly (or shall cause its
27
<PAGE>
advisors to) solicit, authorize the solicitation of or enter into any discussion
(or continue any discussion) with any third party (other than the Purchasers)
concerning any offer or possible offer from any such third party (i) to purchase
any partnership or other interest in the Company, any option or warrant to
purchase such interests or any securities convertible into such interests or any
other security of the Company, (ii) to purchase, lease or otherwise acquire
assets of the Company or any of its Subsidiaries other than in the ordinary
course of business or (iii) to merge, consolidate or otherwise combine with the
Company or any of its subsidiaries (any such offer or possible offer being, an
"Acquisition Proposal"). Each of the Company and the Fremont Partners shall use
--------------------
their best efforts to obtain the return of all confidential information provided
to any third parties (other than the Purchasers) relating to any such potential
transactions involving the Company. Each of the Company and the Fremont Partners
shall immediately notify the Purchaser if any inquiries are received in respect
thereof, and shall provide details with respect thereto, including the identity
of such third party and the price and terms of any such offer.
5.3 Further Assurances. Consistent with the terms and
------------------
conditions hereof, each of the Company and the Fremont Partners shall execute
and deliver such instruments, certificates and other documents and take such
other action as the Purchaser may reasonably require in order to carry out this
Agreement and the transactions contemplated hereby.
5.4 Notice of Certain Events. The Fremont Partners shall
------------------------
notify each Purchaser and the Company promptly of: (a) any event or condition
that would cause any of the representations and warranties made by the Fremont
Partners contained herein no longer to be complete and accurate as of any date
on or before the Closing Date or that may otherwise be necessary to update,
supplement or amend the schedules attached hereto, (b) any failure on the part
of the Fremont Partners to comply with any of its covenants or agreements
contained herein at any time on or before the Closing Date, provided, however,
-------- -------
that any such notice shall not be deemed to cure or waive any breach of a
representation or warranty or of a covenant or agreement made as of the date of
this Agreement unless the Purchaser shall have waived such breach by
consummating the transactions contemplated hereunder notwithstanding such
notice. In addition, the Fremont Partners shall notify each Purchaser promptly
of any Fremont Material Adverse Effect.
5.5 Designated Employees. Prior to the Closing, the Company
--------------------
shall terminate, or cause the termination of, Joseph R. Schillaci ("Schillaci").
The Company shall be solely liable for any severance, termination, "golden
parachute" or other payments or benefits due Schillaci under law or contract,
including without limitation, any and all payments, awards and benefits
28
<PAGE>
that may be due Schillaci under the "Employment Agreement of Joseph R.
Schillaci," dated January 1, 1993, with Petro PSC, L.P. and Petro PSC
Properties, L.P. (predecessors of the Company), or any other agreement between
Schillaci and the Company. The Company shall use commercially reasonable efforts
to obtain a general release from Schillaci, on or prior to the Closing Date,
with respect to any and all claims that he may have against the Company or any
of its Affiliates; provided, however, that the Company shall not be required to
-------- -------
make any expenditures or otherwise incur any obligations whatsoever in
connection therewith (other than as required by his employment agreement).
5.6 1995 Class B Limited Partnership Interest Options. On or
-------------------------------------------------
prior to the Closing Date, any nonvested portions of options granted to
employees under a "Petro Stopping Centers, L.P. 1995 Class B Limited Partnership
Interest Option Agreement," or under any other agreement or arrangement granting
any option to an employee to acquire an interest in the Company (the "Option
------
Agreement"), shall be cancelled in accordance with the terms of the Option
- ---------
Agreement, and any vested portions of options granted to employees under an
Option Agreement shall be repurchased by the Company or be deemed to lapse in
accordance with the terms of the Option Agreement. Any and all costs, fees,
repurchase amounts or compensation paid to employees or otherwise arising from
or in connection with the forfeiture, repurchase or lapse of their options under
an Option Agreement shall be for the Company's account and, in the event that
the aggregate amount of all such costs, fees, and compensation exceeds $100,000,
shall require Purchaser's prior consent (which consent shall not be unreasonably
withheld).
5.7 Partnership Agreement. The Partnership Agreement shall not
---------------------
be amended in any manner inconsistent with the transactions contemplated
hereby.
5.8 Board of Control. The Fremont Partners will not, as members
----------------
of the Board of Control, consent to any action by the Company that would
cause the Company to breach Section 6.2 hereof.
5.9 Conversion of General Partnership Interests. Upon the
-------------------------------------------
request, and at the election, of the Purchasers, Roadside, and SVI if required,
and the Company shall consent to the conversion by Petro, Inc., a Texas
corporation ("Petro"), of up to 12.33% of its General Partnership Interest to a
-----
Limited Partnership Interest; provided, that the Fremont Partners shall not be
liable for any Tax liability or other adverse Tax consequence that Petro may
suffer in connection with this Section 5.9.
29
<PAGE>
ARTICLE VI
COVENANTS OF THE COMPANY
------------------------
6.1 Notice of Certain Events. The Company shall notify each
------------------------
Purchaser and the Fremont Partners promptly of: (a) any event or condition that
would cause any of the representations and warranties made by the Company
contained herein no longer to be complete and accurate as of any date on or
before the Closing Date, and (b) any failure on the part of the Company to
comply with any of its covenants or agreements contained herein at any time on
or before the Closing Date; provided, however, that any such notice shall not be
-------- -------
deemed to cure or waive any breach of a representation or warranty or of a
covenant or agreement made as of the date of this Agreement (as distinguished
from those representations and warranties made as of the Closing Date) unless
the Purchaser shall have waived such breach by consummating the transactions
contemplated hereunder notwithstanding such notice. In addition, the Company
shall notify the Purchaser promptly of any Company Material Adverse Effect.
6.2 Conduct of Business Prior to the Closing. On and after the date
----------------------------------------
hereof and prior to the Closing Date, and except as otherwise provided in this
Agreement or consented to or approved by each Purchaser (which consent or
approval will not be unreasonably withheld), the Company agrees that:
(a) The Company shall, and shall cause each of its Subsidiaries
to, carry on the Company's business in the ordinary course in substantially the
same manner as presently conducted and maintain its business records with
respect to the Company's business accurately and completely in all material
respects;
(b) The Company shall not, and shall cause each of its
Subsidiaries not to, take any action or omit to take any action which will
result in a violation by the Company or any subsidiary of any applicable law,
authorization or permit or cause a breach of any Material Contract by the
Company or any of its Subsidiaries; and
(c) Company shall not, and shall cause each Subsidiary not to,
without the prior written consent of each Purchaser, take or fail to take any
commercially reasonable action that results in the condition set forth in
Section 10.1(a) failing to be satisfied. Company shall promptly notify each
Purchaser in writing of the occurrence of any matter or event that is material
to the business, assets, working capital, financial condition, results of
operations or liabilities (absolute, accrued, contingent or otherwise) of the
Company;
30
<PAGE>
(d) The Company shall furnish to the Purchasers within twenty
(20) days after the end of each month, commencing with the month ending
September 30, 1996: (a) an unaudited statement of operations and cash flow
statement of the Company for such month and for the period of its fiscal year
ended at the end of such month; and (b) an unaudited balance sheet of the
Company as of the end of such month. The Company shall timely file its Quarterly
Report on Form 10-Q for the period ended September 30, 1996. The financial
statements to be delivered by the Company hereunder shall be prepared from the
books and records of the Company and shall be presented in form and substance
consistent with the past practice of the Company with respect to monthly
financial statements prepared by the management of the Company for the Board of
Control of the Company;
(e) After the date hereof, other than (i) in the ordinary course
of business and (ii) actions by officers of the Company permitted by the
Partnership Agreement following approval of the 1996 Annual Budget without
further approval of the Board of Control, the Company shall not and shall cause
its Subsidiaries not to enter into any agreement, contract or arrangements, or
amend any existing agreement or contract, by which its assets or properties are
bound or affected under which the Company or any of its Subsidiaries is
obligated to pay in excess of $100,000 individually, or $250,000 in the
aggregate, without the written consent of each Purchaser;
(f) Except as otherwise contemplated herein, the Company shall
use commercially reasonable efforts to preserve the goodwill and relationship of
the Company with all third parties, including but not limited to customers,
franchisees, suppliers and employees; and
(g) It will not make any distributions in respect of any
Partnership or other interests; and
(h) With respect to the matters referred to in Schedule 3.11(b),
the Company shall use its commercially reasonable efforts to file as soon as
practicable with the Internal Revenue Service the Petro PSC, L.P. 401(k) Plan
for a compliance statement under Revenue Procedure 94-62.
6.3 Access to Properties and Records. Between the date of this
--------------------------------
Agreement and the Closing Date:
(a) The Company shall afford to the Purchasers and their
accountants, counsel and other authorized representatives, reasonable access
during normal business hours to any and all premises, properties, contracts,
commitments, books, records and other information of the Company's business upon
reasonable notice to the Company and shall cause the
31
<PAGE>
officers and employees of the Company to furnish to the Purchasers and its
authorized representatives any and all financial, technical and operating data
and other information pertaining to the Company's business as the Purchasers
shall from time to time reasonably request; and
(b) Each Purchaser acknowledges that the information being
provided to it and its representatives by the Company is subject to the terms of
a confidentiality agreement between Goldman, Sachs & Co., on behalf of the
Company, and Chartwell Investments, Inc. and Mobil Oil Company, dated April 13,
1996 and April 10, 1996, respectively (as each was amended July 23, 1996, the
"Confidentiality Agreements"), which terms are incorporated herein by reference.
- ---------------------------
ARTICLE VII
COVENANTS OF THE PURCHASERS
---------------------------
7.1 Consent Solicitation. As soon as practicable following the date
--------------------
hereof, but in no event later than October 30, 1996, the Purchasers shall
commence a solicitation of consents from the holders of all outstanding Notes
(the "Consent Solicitation") to certain amendments (the "Amendments") to that
certain Indenture, dated as of May 24, 1994 among Petro PSC Properties, L.P. (as
predecessor to the Company), Petro Financial Corporation and First Trust
National Association, as Trustee. The effectiveness of the Amendments will be
conditioned upon obtaining valid consents from holders of not less than 75% in
aggregate principal amount of the Notes outstanding. The other terms and
conditions of the Consent Solicitation, and the terms of the Amendments, will be
substantially, as set forth in the draft form of Consent Solicitation, dated
October 18, 1996, previously provided to the Company and the Fremont Partners.
The Purchasers and the Company shall cooperate in the making and completion of
the Consent Solicitation and in causing the Amendments to become effective prior
to the Closing. If requested by the Purchasers, the Company shall (i) provide
the Purchasers with such lists of the registered holders of the Notes as the
Purchasers may request; (ii) fix a record date for the purpose of determining
the holders of Notes entitled to consent to the Amendments; (iii) execute, and
request the Trustee to execute, an amendment to the Indenture reflecting the
Amendments, all as soon as the Company is advised by the Purchasers that the
holders of the requisite principal amount of the Notes have consented (and not
theretofore revoked such consent to such amendments); provided, however, that
-------- -------
the Purchasers shall (A) deliver to the Company, promptly after receipt but in
no case, more than 3 Business Days after receipt, all consents received pursuant
to the Consent Solicitation and (B) deliver to the Trustee any required legal
opinions. The Purchasers shall ensure that the Consent Solicitation is
conducted in accordance with all
32
<PAGE>
applicable laws and the Indenture and that all consents acquired pursuant to the
Consent Solicitation effect the Amendments in accordance with all applicable
laws and the Indenture. Subject to Sections 1.3(b)(i) and 13.1 hereof, the
Purchasers shall be responsible for all Consent Solicitation Expenses and all
other expenses they incur (including, but not limited to, the fees and
disbursements of counsel) in connection with or relating to the Consent
Solicitation.
7.2 Reasonable Efforts. Each Purchaser shall use all commercially
------------------
reasonable efforts to satisfy the conditions to Closing set forth in Section
10.2 of this Agreement and otherwise to consummate the transactions contemplated
by this Agreement as expeditiously as possible.
7.3 Further Assurances. Consistent with the terms and conditions
------------------
hereof, each of the Purchasers shall execute and deliver such instruments,
certificates and other documents and take such other action as the Company or
the Fremont Partners may reasonably require in order to carry out this Agreement
and the transactions contemplated hereby.
7.4 Amendment to Omnibus Agreement. Without the written consent of
------------------------------
the Fremont Partners, the Purchasers shall not amend, waive or otherwise modify
that certain Omnibus Agreement by and among James A. Cardwell, Sr., James A.
Cardwell, Jr., JAJCO II, Inc., Petro, Inc., and Mobil Co, Petro Holdings GP
Corp., Petro Holdings LP Corp. and the Company, of even date herewith (the
"Omnibus Agreement") in any manner that would be reasonably likely to have the
-----------------
effect of (i) increasing any cost or liability on the part of the Fremont
Partners in connection with the consummation of the transactions provided for
hereby or thereby or (ii) decreasing the likelihood of the Closing occurring
under this Agreement or of the closing occurring under the Omnibus Agreement.
7.5 Amendment to Partnership Agreement. Without the prior written
----------------------------------
consent of the Fremont Partners (which consent may be granted or withheld in the
sole discretion of the Fremont Partners), the Purchasers shall not cause or
permit any amendment, waiver or other modification of Section 6.6 of the
Partnership Agreement, which provision obligates the Company to indemnify the
general partners of the Company in the circumstances and subject to the
limitations set forth therein.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 Environmental Assessment and Indemnification.
--------------------------------------------
33
<PAGE>
(a) Prior to the Closing Date, the Purchasers may, at their own
expense, conduct Phase II Environmental Assessments (the "Assessments") at
-----------
certain of the Company's facilities to investigate environmental conditions, as
reasonably required by the Purchasers' lender or lenders, the scope of which
Assessments shall be based on the reasonable request of the Purchasers' lender
and which shall be subject to the Company's consent, which consent shall not be
unreasonably withheld. The Purchasers shall use their best efforts to complete
the Assessments within 30 days after execution of this Agreement, but in no
event more than 45 days after such date. The Purchasers shall retain Fluor
Daniel/GTI or another environmental consultant mutually agreed to by the
Company. The Purchasers shall cause such consultant to take split samples of
any soil and/or groundwater borings or samples and deliver such borings or
samples to a consultant or laboratory designated by the Company for testing and
verification by the Company, which testing and verification shall be at the
Company's expense. The Purchasers shall cause their environmental consultant to
ensure that all proper protocols and chain-of-custody requirements are met so
that all borings and/or samples meet all applicable standards, and shall provide
all documentation pertaining to the foregoing (including but not limited to
boring logs and chain-of-custody data) to the Company's consultant or laboratory
simultaneous with the split samples. At the time the split samples are shipped
to the Company's consultant or laboratory, the Purchasers shall identify which
parallel samples they intend to actually sample, including, but not limited to,
the constituents to be tested and the testing protocol to be used.
(b) In the event that contamination above applicable regulatory
action levels ("Excess Contamination") is found in any of the samples taken on
--------------------
behalf of the Purchasers, such results shall be subject to verification by the
Company, including resampling as appropriate and agreed to by and between the
Company and the Purchasers. If the Company and the Purchasers agree that the
subject property contains Excess Contamination in excess of both the reserves
set forth in the Company's June 30, 1996 balance sheet, plus the then current
budget for environmental expenditures without duplication (together which
approximate $445,000), and if such contamination was caused by or is legally
imputable to the Company, the Purchasers shall cause their environmental
consultant to develop, within five (5) days of the Company's verification of
Excess Contamination, a cost estimate (excluding the cost of the Assessments)
for the additional investigation and remediation anticipated to be required by
the Governmental Authorities having responsibility for the Excess Contamination
under Environmental Laws ("Article VIII Remediation"). The Purchasers shall
------------------------
provide a copy of all reports and data generated or prepared by or for the
Purchasers pursuant to this paragraph 8.1 promptly to the Company. All reports,
data or other information prepared or generated by or
34
<PAGE>
for the Purchasers in connection with this paragraph 8.1 shall be considered
confidential within the meaning of the Confidentiality Agreements. The Company
shall have the right to retain its own environmental consultant to verify such
cost estimate.
(c) If, as of the Closing Date, the Purchasers and the Company
disagree, based on the cost estimates developed in accordance with subsection
(b) of this Section 8.1, as to whether the Article VIII Remediation will exceed
$1,500,000, then the Purchasers and the Company shall mutually designate an
independent consultant (compensated equally by the Purchasers and the Company)
to develop a similar cost estimate, and such cost estimate shall be
determinative for purposes of Section 10.1(h) costs for the Article VIII
Remediation as set forth in subsection (d) of this Section 8.1.
(d) The parties agree that, following the Closing, the Company
shall pay for actual costs incurred for Article VIII Remediation up to and
including $500,000; that the Fremont Partners shall pay for 45.17% of such costs
in excess of $500,000 up to $1,500,000; and that the Company shall be solely
responsible and pay for any such costs in excess of $1,500,000. Article VIII
Remediation shall not include the costs incurred to prepare the Assessments. The
parties agree that following the Closing the Purchasers shall cause the Company
to undertake responsibility for completing the Article VIII Remediation to the
satisfaction of the applicable Governmental Authorities; provided that, prior to
--------
undertaking any such actions, the Purchasers shall obtain the consent of the
Fremont Partners, which consent shall not unreasonably be withheld. The
Purchasers agree to cause the Company to prepare any documentation and submit
any and all filings, subject to consultation with and agreement by the Fremont
Partners, required by any Environmental Law to all Governmental Authorities in
connection with the Article VIII Remediation. The Purchasers agree that,
following the Closing, the Company shall be responsible for any fines or
penalties based on delay or late filing assessed by any Governmental Authority
in connection therewith following the Closing.
(e) Notwithstanding Article XI of this Agreement and other than
as provided in Section 10.1(h), this Section shall be the sole remedy of the
Purchasers in connection with, relating to or resulting from the Assessments, or
for breach of Section 3.15(d) hereof, and the obligations of the Fremont
Partners under Section 8.1(d) shall terminate eighteen (18) months after the
Closing Date; provided, however, that the obligations of the Fremont Partners
-------- -------
under Section 8.1(d) shall not terminate with respect to those claims
specifically identified with reasonable particularity and supporting
documentation by written notice from the Purchaser to the Fremont Partners prior
to the termination of such eighteen-month period.
35
<PAGE>
ARTICLE IX
TAX MATTERS
-----------
9.1 Cooperation. After the Closing Date, the Fremont Partners, the
-----------
Purchasers, and the Company (and each of their respective partners, officers,
employees, representatives, or affiliates) shall reasonably cooperate with each
other in the filing of Tax Returns and in contesting any Tax claim with respect
to the Company or with respect to the Fremont Partners solely in their capacity
as partners of the Company, which cooperation shall include (i) the retention
(until the applicable statute of limitation shall have expired) and, upon the
request of the party or parties filing such Tax Returns or controlling
proceedings relating to such Tax claim, the provision to such party or parties,
of records and information which are relevant to such Tax Returns or such Tax
claim and (ii) making employees available on a mutually convenient basis to
provide additional information, explanation of any material provided hereunder,
assistance in completing such Tax Returns or to testify at proceedings relating
to such Tax claim. The party requesting such information shall pay the
reasonable external costs of the party providing the requested information.
9.2 Closing Tax Return.
------------------
(a) No later than forty-five (45) business days prior to the
time required by law for the filing of such returns (including any extensions),
the Company shall, and the Purchasers shall cause the Company to, prepare for,
and deliver to, the Fremont Partners a Federal Schedule K-1 (the "Closing K-1")
-----------
and any substantially similar state Tax Return with respect to the Company for
the period which begins after the 1995 taxable year and includes the Closing
Date (the "Pre-Closing Date Period"). Such Closing K-1 and state Tax Returns
shall be prepared (i) in a manner consistent with past practice and (ii) in
accordance with the interim closing of the books method that clearly reflects
income. In preparing such returns, the Company shall not, and the Purchasers
shall take all actions legally available to it to cause the Company not to, take
any position, except as required by applicable law or consistent with past
practice, which would result in, or have the effect of, (x) the shifting of
deductions, credits and other similar items into a post-Closing Date period or
(y) the shifting of income and other similar items into the Pre-Closing Date
Period. The Purchasers, the Company and the Petro Partners (as defined below)
shall cooperate with the Fremont Partners with respect to (i) matters involving
Taxes that are not consistent with past practice and that could materially
affect the Fremont Partners' liability for Tax in a Pre-Closing Date Period and
(ii) the method of implementing the closing of the books method for purposes of
this Section 9.2(a).
36
<PAGE>
(b) No later than thirty (30) days prior to the time required by
law for the filing of such returns (including any extensions), the Company
shall, and the Purchaser shall cause the Company to, deliver to the Fremont
Partners for review and approval any Tax Returns required to be filed by the
Company with respect to the Pre-Closing Date Period. Such Tax Returns shall not
be filed without the prior written approval of the Fremont Partners, which
approval shall not be unreasonably withheld. The Fremont Partners shall either
deliver such approval to the Company or notify the Company of any objections no
later than seven (7) days prior to the time required for the filing of the Tax
Return.
9.3 Pre-Closing Date Tax Audits.
---------------------------
(a) The Fremont Partners shall be responsible for and shall have
the right to control, along with Petro, Inc., James A. Cardwell, Sr., James A.
Cardwell, Jr. and JAJCO II, Inc. (collectively, the "Petro Partners"), any audit
--------------
concerning any matters related to Taxes of the Company for periods prior to and
including the Closing Date ("Pre-Closing Audit"). The Company shall, and the
Purchasers shall take all actions legally available to it to cause the Company
to, (i) promptly notify the Fremont Partners in writing of the commencement of
any Pre-Closing Audit and (ii) take any actions or undertakings that are
necessary to permit the Fremont Partners to participate in such Pre-Closing
Audit and, along with the Petro Partners, to jointly control the proceedings
related thereto, provided that the Fremont Partners and the Petro Partners shall
(x) keep the Purchasers apprised of any events arising out of such Pre-Closing
Audit or proceedings that may materially affect such Purchaser's liability for
Tax. In the event that, during the course of a Pre-Closing Audit, the Fremont
Partners and the Petro Partners seek to take any position (including by agreeing
with the position of a Tax authority) that (x) is inconsistent with past
practice and (y) would, in respect of periods after the Closing Date, materially
adversely affect the Tax liability of the partners of the Company, determined in
the aggregate, then the Fremont Partners shall obtain the written consent of the
Company prior to taking any such position, which consent shall not be
unreasonably withheld. If the Company does not consent, then the Company shall
defend and hold the Fremont Partners and the Petro Partners harmless from and
against any increased liability for Tax and any other Damages (as defined below)
resulting from the failure to take the position sought to be taken by the
Fremont Partners and/or the Petro Partners. In the event that the Company
elects to withhold such consent, the Company shall deliver to the Fremont
Partners or the Petro Partners, as the case may be, a written confirmation of
the foregoing undertaking at the time it so elects.
37
<PAGE>
(b) In no event shall the Company or any partner thereof settle
any audit of the Company for any periods prior to or including the Closing Date
without the written consent of the Fremont Partners, which consent shall not be
unreasonably withheld. The Purchasers acknowledge that after the Closing Date,
the Tax Matters Partner (as defined in the Partnership Agreement) shall be
Petro, Inc.
9.4 Purchase Price Allocation. Within ninety (90) days after the
-------------------------
Closing Date, the Fremont Partners and the Purchasers shall mutually agree on an
allocation of the Purchase Price among the assets of the Company to which the
Purchaser Interest relates according to the relative fair market values of such
assets on the Closing Date. The Purchasers may select, at the Company's cost
and expense, an independent appraisal firm to conduct the initial appraisal of
such fair market values. If the agreed-upon allocation would have a material
adverse effect on the Petro Partners with respect to the allocation of profit
and loss subsequent to the Closing Date, the consent of the Petro Partners shall
be required to such allocation, which consent shall not be unreasonably
withheld. If the parties are unable to agree on such fair market values, the
parties shall select an independent appraisal firm (other than the firm which
conducted the initial appraisal, if any) to determine such values. The
conclusion of such appraisal firm shall be conclusive and binding. The fees and
expenses of such appraisal firm shall be shared equally by the Fremont Partners
and the Company.
9.5 Treatment of Purchaser Interest. The Fremont Partners and the
-------------------------------
Purchasers agree that the sale and purchase of the Purchaser Interest
contemplated by this Agreement shall be treated as a sale and purchase of
partnership interests in the Company for all Tax purposes.
9.6 Transfer Taxes. All state and local transfer, documentary,
--------------
stamp, and other similar Taxes or fees payable solely with respect to and
directly as a result of the purchase and sale of the Purchaser Interest pursuant
to Section 1.2 of this Agreement shall be borne by the Fremont Partners.
9.7 Section 754 Election. At the request of any of the Purchasers,
--------------------
the Tax Matters Partner shall cause the Company timely to make an election
pursuant to section 754 of the Code.
ARTICLE X
CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
-------------------------------------------
10.1 Conditions Precedent to the Obligations of the Purchasers. The
---------------------------------------------------------
obligations of the Purchasers under this Agreement shall be subject to each of
the following conditions
38
<PAGE>
(except such of the following conditions as shall have been expressly waived in
writing by the Purchasers):
(a) All of the representations and warranties other than those
in Section 3.15 hereof of each of the Fremont Partners and the Company contained
in this Agreement (and any Schedule to this Agreement or closing certificate
delivered in connection herewith) shall be true and correct in all respects
(without reference to any materiality qualifications contained therein) as of
the date made and as of the Closing Date as if made on and as of the Closing
Date (except to the extent that any representation or warranty is made expressly
as of a specific date, in which case such representation or warranty shall be
true and correct as of such specified date), unless the failure of such
representations of warranties to be true and correct as of any of such dates
would not, in the aggregate, reasonably be expected to have a Company Material
Adverse Effect or a Purchaser Material Adverse Effect. For purposes of the
immediately preceding sentence, the parenthetical phrase "without reference to
any materiality qualifications contained therein" shall not apply to the
materiality standard contained within the definition of "Company Material
Adverse Effect" set forth in the first sentence of Section 3.5. Each of the
Fremont Partners and the Company shall have performed and complied with, in all
respects (without reference to any materiality qualifications contained
therein), all of the covenants, conditions and agreements required by this
Agreement to be performed or complied with by it prior to or at the Closing,
unless the failure so to perform or comply would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or a Purchaser
Material Adverse Effect (except for Section 6.2(d) as to delivery of the
financial information specified therein and Section 6.2(g) as to which no
material standard shall apply); and the Purchasers shall have received at the
time of the Closing certificates from each of the Fremont Partners and the
Company reasonably satisfactory in form to the Purchasers certifying as to the
satisfaction by each the Fremont Partners and the Company of all of the
conditions set forth in this Section 10.1(a) and Sections 10.1(c), (d), (h), (i)
and (j);
(b) The Purchasers shall have received the written opinion of
(i) the General Counsel of SVI addressed to the Purchasers and dated as of the
Closing Date, substantially in the form of Exhibit A, (ii) Skadden, Arps, Slate,
Meagher & Flom, counsel to the Fremont Partners addressed to the Purchasers and
dated as of the Closing Date, substantially in the form of Exhibit B and (ii)
Skadden, Arps, Slate, Meagher & Flom, counsel to the Company addressed to the
Purchasers substantially in the form of Exhibit C;
---------
(c) (i) No action, suit, claim or administrative proceeding
shall be pending seeking to restrain,
39
<PAGE>
enjoin or prohibit or declare illegal, or seeking damages in connection with,
any part of the Agreement or the transactions contemplated hereby, which would
reasonably be expected to result in a preliminary or permanent injunction
against consummating the transactions contemplated hereby or, if the
transactions contemplated hereby were consummated, an order to nullify or render
ineffective this Agreement or such transactions, or the recovery against the
Purchasers of substantial damages that in each such case would reasonably be
expected to have a Company Material Adverse Effect or a Purchaser Material
Adverse Effect;
(ii) None of the parties to this Agreement or their affiliates shall
have received written notice from any Governmental Authority of: (A) its
intention to institute any action or proceeding to restrain or enjoin or nullify
or render ineffective this Agreement or the transactions contemplated hereby if
consummated, or commence any investigation into the consummation of this
Agreement and the transactions contemplated hereby; or (B) the actual
commencement of such an investigation, which in the case of either clause (A) or
clause (B) would reasonably be expected to have a Company Material Adverse
Effect or a Purchaser Material Adverse Effect;
(iii) No order, decree or judgment of any Governmental Authority
shall be subsisting against any of the parties which would render it unlawful or
materially restrain or limit Purchasers' ability, as of the Closing Date, to
effect the transactions contemplated hereunder in accordance with the terms
hereof or to operate the business of the Company substantially in the same
manner as presently being conducted;
(d) The consents, permits and approvals of Governmental
Authorities and other Persons listed on Schedule 10.1(d) hereto shall have been
obtained with no material adverse conditions attached and no material expense
imposed on the Company;
(e) The Purchasers shall have received an assignment from
Roadside of its rights under that certain Option and Right of First Refusal
Agreement, dated as of April 30, 1992, by and among Petro PSC Properties, L.P.,
Roadside, James A. Cardwell, Sr. and James A. Cardwell, Jr;
(f) The Purchasers shall have received a certificate of non-
foreign status for purposes of sections 897 and 1445 of the Code executed by
each of the Fremont Partners in a form reasonably acceptable to the Purchasers.
If such certificate is not delivered to the Purchasers by the Fremont Partners,
the Purchasers shall be entitled to withhold 10% of the Purchase Price;
40
<PAGE>
(g) The Debt Financing shall be available to the Purchasers
substantially consistent with the terms set forth in the Commitment Letter.
(h) The Article VIII Remediation costs, as determined by the
procedures set forth in Section 8.1 hereof, shall not be in excess of $1.5
million; and, in any event, if the Purchasers and the Fremont Partners disagree
as to such costs, but agree that such costs do not exceed $1.5 million, this
Section 10.1(h) shall be deemed satisfied.
(i) There shall not have been a Company Material Adverse Effect
subsequent to the date hereof except for such matters disclosed in Schedule 3.5;
(j) The Fremont Partners shall have, by written agreement: (i)
waived a pro rata share of its annual fee for services rendered pursuant to the
Partnership Agreement for the period from the Closing Date through December 31,
1996; (ii) terminated any provision in any agreement pursuant to which such
services have been provided; and (iii) acknowledged that neither they nor their
affiliates are entitled to any other fees or other payments from the
Partnership; and
(k) The Purchasers shall have consummated the Consent
Solicitation;
(l) All actions required to be taken or completed by the Company
on or prior to the Closing Date pursuant to Sections 5.5 and 5.6 shall have been
taken or completed; and
(m) The filing described in Section 6.2(h) shall have been made.
10.2 Conditions Precedent to the Obligations of the Fremont Partners.
---------------------------------------------------------------
The obligations of the Fremont Partners under this Agreement shall be subject to
each of the following conditions (except such of the following conditions as
shall have been expressly waived in writing by the Fremont Partners):
(a) All of the representations and warranties of the Purchasers
contained in this Agreement and any document delivered in connection herewith
shall be true and correct in all material respects as of the date made and as of
the Closing Date as if made on and as of the Closing Date (except to the extent
that any representation or warranty is made expressly as of a specific date, in
which case such representation or warranty shall be true and correct as of such
specified date), unless the failure of such representations of warranties to be
true and correct as of any of such dates would not, in the aggregate, reasonably
be expected to have a Fremont Material Adverse Effect. The Purchasers shall
have performed and complied with, in all
41
<PAGE>
material respects, all of the covenants, conditions and agreements required by
this Agreement to be performed or complied with by it prior to or at the
Closing; and the Fremont Partners and the Company shall have received at the
time of the Closing one or more certificates from the Purchasers reasonably
satisfactory in form to the Fremont Partners and the Company certifying as to
the satisfaction by the Purchasers of all of the conditions set forth in this
Section 10.2(a);
(b) The Fremont Partners and the Company shall have received the
written opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to the
Purchasers, addressed to the Fremont Partners and the Company and dated as of
the Closing Date, substantially in the form of Exhibit D;
(c) (i) No action, suit, claim or administrative proceeding
shall be pending seeking to restrain, enjoin or prohibit or declare illegal, or
seeking damages in connection with, any part of the Agreement or the
transactions contemplated hereby, which would reasonably be expected to result
in a preliminary or permanent injunction against consummating the transactions
contemplated hereby or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement or such
transactions, or the recovery against the Company or the Fremont Partners of
substantial damages that in each such case would reasonably be expected to have
a Fremont Material Adverse Effect;
(ii) None of the parties to this Agreement or their affiliates shall
have received written notice from any Governmental Authority of: (A) its
intention to institute any action or proceeding to restrain or enjoin or nullify
or render ineffective this Agreement or the transactions contemplated hereby if
consummated, or commence any investigation into the consummation of this
Agreement and the transactions contemplated hereby; or (B) the actual
commencement of such an investigation, which in the case of either clause (A) or
clause (B) would reasonably be expected to have a Fremont Material Adverse
Effect;
(iii) No order, decree or judgment of any Governmental Authority
shall be subsisting against any of the parties which would render it unlawful or
materially restrain or limit the ability of either Roadside or SVI, as of the
Closing Date, to effect the transactions contemplated hereunder in accordance
with the terms hereof;
(d) All consents, permits and approvals of Governmental
Authorities necessary for consummation of the transactions contemplated hereby
shall have been obtained, other than those which, if not obtained, would not
have a Fremont Material Adverse Effect; and
42
<PAGE>
(e) The Purchase Price to be paid to the Fremont Partners, after
giving effect to all reductions pursuant to Section 1.3(b) hereof, shall not be
less than $25.5 million; provided, however that such amount shall be reduced by
-------- -------
an amount equal to 45.17% of every dollar by which trade accounts payable and
accrued expenses of the Company as of the Closing Date exceeds $42,429,000 as
determined in accordance with Section 1.5 hereof.
10.3 Conditions Precedent to the Obligations of the Company. The
------------------------------------------------------
obligations of the Company under this Agreement shall be subject to the
following condition (except as such condition shall have been expressly waived
in writing by the Company):
(a) The transactions contemplated under the Omnibus Agreement
shall have been consummated as of the date hereof; and
(b) (i) No action, suit, claim or administrative proceeding
shall be pending seeking to restrain, enjoin or prohibit or declare illegal, or
seeking damages in connection with, any part of the Agreement or the
transactions contemplated hereby, which would reasonably be expected to result
in a preliminary or permanent injunction against consummating the transactions
contemplated hereby or, if the transactions contemplated hereby were
consummated, an order to nullify or render ineffective this Agreement or such
transactions, or the recovery against the Company of substantial damages that in
each such case would reasonably be expected to have a Company Material Adverse
Effect; and
(ii) None of the parties to this Agreement or their affiliates shall
have received written notice from any Governmental Authority of: (A) its
intention to institute any action or proceeding to restrain or enjoin or nullify
or render ineffective this Agreement or the transactions contemplated hereby if
consummated, or commence any investigation into the consummation of this
Agreement and the transactions contemplated hereby; or (B) the actual
commencement of such an investigation, which in the case of either clause (A) or
clause (B) would reasonably be expected to have a Company Material Adverse
Effect.
ARTICLE XI
TERMINATION OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
-------------------------------
11.1 Termination of Representations and Warranties. The
---------------------------------------------
representations and warranties of the Company set forth in
43
<PAGE>
Article III hereof shall terminate as of the Closing, and shall be of no further
force or effect thereafter. The representations and warranties of the
Purchasers set forth in Article IV hereof shall survive the Closing without
termination. The representations and warranties of the Fremont Partners set
forth in Sections 2.1, 2.2, 2.3, 2.4, 2.5 and 2.8 shall survive the Closing
without termination. The representations of the Fremont Partners set forth in
Sections 2.6 and 2.7 shall terminate upon the earlier to occur of (i) April 30,
1997 and (ii) the issuance of a report of the independent certified public
accountant of the Company or its successor entity with respect to the financial
statements of the Company or its successor entity for the period ended December
31, 1996, and shall be of no further force or effect thereafter; provided,
--------
however, that the obligations of the Fremont Partners under Section 11.2 shall
- -------
not terminate with respect to those claims specifically identified with
reasonable particularity and supporting documentation by written notice from the
Purchaser to the Fremont Partners prior to the expiration of the relevant time
periods set forth in this Section 11.1.
11.2 Fremont Partners' Indemnification. Subject to the limitations
---------------------------------
set forth in this Article XI, each of the Fremont Partners jointly and severally
agrees to indemnify, defend and hold the Purchasers harmless from and against
any and all loss, cost, Liability, damage and expenses (including reasonable
legal and other expenses incident thereto, collectively, "Damages") resulting
-------
from breach of (i) any of the Fremont Partners' representations or warranties
contained in Article II of this Agreement or (ii) the covenant of the Fremont
Partners set forth in Section 5.8 of this Agreement; provided, however, the
-------- -------
Purchasers upon consummating the transaction contemplated hereunder shall be
deemed to have waived any right to indemnification under this Section 11.2 for
any breach by the Fremont Partners of Article II of this Agreement or Section
5.8 of this Agreement if such breach or information regarding such breach shall
have been disclosed in writing at or prior to the Closing pursuant to Section
5.4 or Section 6.1 of this Agreement by the Fremont Partners or the Company;
provided, further that any claim for a breach of a representation or warranty
- -------- -------
shall have been made prior to the expiration date thereof set forth in Section
11.1 above.
11.3 Purchasers' Indemnification. The Purchasers agree, jointly and
---------------------------
severally, to indemnify, defend and hold the Fremont Partners and the Company
harmless, from and after the Closing Date, from and against any Damages
resulting from any of the Purchasers's breach of any of its representations or
warranties contained in Article IV of this Agreement.
11.4 Limitation.
----------
44
<PAGE>
(a) The provisions for indemnity contained in Section 11.2 shall
be effective with respect to a breach of a representation or warranty set forth
in Section 2.6 or 2.7 hereof or of the covenant set forth in Section 5.8 hereof
only to the extent and by the amount that the aggregate amount of all Damages
incurred as a result of such breaches exceeds $250,000 (except for a breach of
Section 6.2(g) as to which all Damages shall be indemnified), and Damages in
excess of $5,000,000 incurred as a result of such breaches shall be for the sole
and exclusive account of the Purchasers. Notwithstanding any other provision of
this Agreement, the liability of the Fremont Partners for Damages to the
Purchasers as a result of a breach of the representation or warranty set forth
in Section 2.6 or 2.7 hereof or of the covenant set forth in Section 5.8 hereof
shall be limited to 45.17% of the aggregate amount of such Damages.
(b) Each Purchaser acknowledges and agrees that after the
Closing, except with respect to any breach by the Fremont Partners of a covenant
to be performed or complied with by the Fremont Partners following the Closing,
the Purchasers' sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in Section 11.2.
11.5 Indemnity Procedure.
-------------------
(a) Upon obtaining knowledge of any claim or demand which has
given rise to, or could reasonably give rise to, a claim for indemnification
hereunder, the party seeking indemnification ("Indemnitee") shall promptly give
----------
written notice ("Notice of Claim") of such claim or demand to the other party
---------------
("Indemnitor"). Indemnitee shall furnish to the Indemnitor in reasonable detail
----------
such information as Indemnitee may have with respect to such indemnification
claim (including copies of any summons, complaint or other pleading which may
have been served on it and any written claim, demand, invoice, billing or other
document evidencing or asserting the same). Subject to the limitations set
forth in this Section 11.5(a), no failure or delay by Indemnitee in the
performance of the foregoing shall reduce or otherwise affect the obligation of
Indemnitor to indemnify and hold Indemnitee harmless, except to the extent that
such failure or delay shall have adversely affected Indemnitor's ability to
defend against, settle or satisfy any Liability, damage, loss, claim or demand
for which Indemnitee is entitled to indemnification hereunder.
(b) If the claim or demand set forth in the Notice of Claim
given by Indemnitee is a claim or demand asserted by a third party, Indemnitor
shall have thirty (30) days after the Date of Notice of Claim to notify
Indemnitee in writing of its election to defend such third party claim or demand
on behalf
45
<PAGE>
of the Indemnitee. If Indemnitor elects to defend such third party claim or
demand, Indemnitee shall make available to Indemnitor and its agents and
representatives all records and other materials which are reasonably required in
the defense of such third party claim or demand and shall otherwise cooperate
with, and assist Indemnitor in the defense of, such third party claim or demand,
and so long as Indemnitor is defending such third party claim in good faith,
Indemnitee shall not pay, settle or compromise such third party claim or demand.
If Indemnitor elects to defend such third party claim or demand, Indemnitee
shall have the right to participate in the defense of such third party claim or
demand, at Indemnitee's own expense. If Indemnitor does not elect to defend
such third party claim or demand or does not defend such third party claim or
demand in good faith, Indemnitee shall have the right, in addition to any other
right or remedy it may have hereunder at Indemnitor's expense, to defend such
third party claim or demand; provided, however, that (i) Indemnitee shall not
-------- -------
have any obligation to participate in the defense of, or defend, any such third
party claim or demand; and (ii) Indemnitee's defense of or its participation in
the defense of any such third party claim or demand shall not in any way
diminish or lessen the obligations of Indemnitor under the agreements of
indemnification set forth in this Section 11.5.
(c) The term "Date of Notice of Claim" shall mean the date the
Notice of Claim is effective pursuant to Section 13.2 of this Agreement.
(d) No claim giving rise to a Notice of Claim shall be
compromised or settled except with the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld.
ARTICLE XII
TERMINATION
-----------
12.1 Grounds for Termination. This Agreement may be terminated at
-----------------------
any time prior to the Closing Date:
(a) By the mutual written agreement of the Company, the
Purchasers and the Fremont Partners;
(b) By the Fremont Partners (if the Fremont Partners are not
then in breach of any term of this Agreement), if any of the conditions set
forth in Section 10.2 of this Agreement shall have become incapable of
fulfillment, and shall not have been waived by the Fremont Partners;
46
<PAGE>
(c) By the Company (if the Company is not then in breach of any
term of this Agreement), if the condition set forth in Section 10.3 of this
Agreement shall have become incapable of fulfillment, and shall not have been
waived by the Company;
(d) By the Purchasers (if none of the Purchasers is then in
breach of any term of this Agreement), if any of the conditions set forth in
Section 10.1 of this Agreement shall have become incapable of fulfillment, and
shall not have been waived by both Purchasers;
(e) By the Purchasers or the Fremont Partners if the Closing
shall not have occurred by February 1, 1997 (other than as a result of a breach
of this Agreement by the party seeking termination); or
(f) By the Fremont Partners, if by October 25, 1996:
(i) Bank of Boston shall not have waived the conditions to
close set forth in the first sentence of paragraph 2, the first sentence of
paragraph 10, and the requirement to receive a 7-year business plan and
financial projections set forth in paragraph 16, each under the "Closing
Conditions" set forth in the Commitment Letter, and
(ii) the Fremont Partners shall not have received the
substance of legal opinions to be delivered pursuant to Section 5.6 of the
Omnibus Agreement accompanied by a certificate executed by the Purchasers
stating that the substance of such opinions are satisfactory to each of the
parties to the Omnibus Agreement.
12.2 Effect of Termination. If this Agreement is terminated and the
---------------------
transactions contemplated hereby are not consummated as provided in Section
12.1, this Agreement shall become void and of no further force and effect,
except for (i) Section 13.1, which shall survive such termination and (ii) any
liability for any breach of a representation, warranty, covenant or agreement
contained in this Agreement causing or permitting such termination; provided,
--------
however, that neither the Company nor the Fremont Partners shall have any
- -------
liability for any such breach unless such breach, together with all such
breaches of the Company and the Fremont Partners shall, in the aggregate,
constitute a Company Material Adverse Effect or a Purchaser Material Adverse
Effect; provided, further, that for purposes of determining whether or not such
-------- -------
breach or breaches, in the aggregate, constitute a Company Material Adverse
Effect or a Purchaser Material Adverse Effect, any materiality qualification
47
<PAGE>
of any individual representation, warranty, covenant or agreement contained in
this Agreement shall be disregarded.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Costs and Expenses. Except as expressly set forth otherwise in
------------------
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, each of the parties to this Agreement shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
closing of this Agreement and the transactions provided for hereby.
Notwithstanding the foregoing, in the event that this Agreement is terminated by
the Fremont Partners pursuant to Section 12.1(b) solely as a result of the
condition set forth in Section 10.2(e) having become incapable of fulfillment,
then the Company shall, promptly following receipt of substantiating
documentation, pay to the Purchasers 50% of the actual amount of the out-of-
pocket expenses incurred and paid by the Purchasers in connection with the
transactions contemplated by this Agreement in an aggregate amount payable by
the Company not in excess of $750,000. The legal and accounting fees paid or
incurred by the Company in connection with the proposed sale of the Company and
the transactions contemplated by this Agreement shall not exceed $1,060,000.
13.2 Notices. Any notice, request, consent, approval or other
-------
document, instrument or communication that may be required or permitted to be
delivered or served hereunder shall be effective upon delivery and shall be in
writing and may be personally delivered, mailed by courier or sent by facsimile
and confirmed by telephone as follows (until notice of a change thereof is given
as provided herein):
If to the Purchasers:
Petro Holdings GP Corp.
c/o Chartwell Investments, Inc.
717 Fifth Avenue
New York, New York
Attention:Todd R. Berman
Facsimile:(212) 591-5533
Telephone:(212) 521-3500
48
<PAGE>
and to:
Mobil Long Haul Inc.
3225 Gallows Road
Fairfax, Virginia 22037
Attention: James H. Breed and Mark Skolnik
Facsimile: (703) 846-4672
Telephone: (703) 846-5430
(703) 846-7025
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Attention:Russell W. Parks, Jr., P.C.
Facsimile:(202) 887-4288
Telephone:(202) 887-4092;
If to Fremont Partners:
Roadside, Inc.
c/o Fremont Group, L.L.C.
50 Fremont Street, Suite 3700
San Francisco, California 94105
Attention:Timothy H. Hosking
Facsimile:(415) 512-7121
Telephone:(415) 284-8701;
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
Four Embarcadero Center
San Francisco, CA 94111
Attention: Kenton J. King
Facsimile: (415) 984-2698
Telephone: (415) 984-6483;
49
<PAGE>
If to Company:
Petro Stopping Centers, L.P.
6080 Surety Dr.
El Paso, Texas 79905
Attention: James A. Cardwell, Sr.
Facsimile: (915) 774-7373
Telephone: (915) 779-4711;
with copies to:
Skadden, Arps, Slate, Meagher & Flom
Four Embarcadero Center
San Francisco, CA 94111
Attention: Kenton J. King
Facsimile: (415) 984-2698
Telephone: (415) 984-6483;
Kemp, Smith, Duncan & Hammond
2000 State National Bank Plaza
El Paso, Texas 79901
Attention:Darrell Windham
Facsimile:(915) 546-5360
Telephone:(915) 533-4424; and
Thelen, Marrin, Johnson & Bridges LLP
Two Embarcadero Center, Suite 2100
San Francisco, California 94111
Attention:Nancy L. Murray
Facsimile:(415) 421-1068
Telephone:(415) 392-6320.
13.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
13.4 Entire Agreement. This Agreement (including the Exhibits and
----------------
Schedules hereto, which are incorporated herein and made a part hereof),
together with the Confidentiality Agreements, sets forth the entire
understanding and agreement between the parties as to the matters covered herein
and supersedes and replaces any prior understanding, agreement or statement of
intent, in each case, written or oral, including without limitation the letters
of intention and other correspondence heretofore exchanged between the parties.
13.5 Captions. All headings contained in this Agreement are for
--------
convenience or reference only and shall not control or affect in any way the
meaning, construction or interpretation of any of the provisions hereof.
50
<PAGE>
13.6 Governing Law. This Agreement shall be governed by the laws of
-------------
the State of Delaware (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including but not limited to
matters of validity, construction, effect and performance.
13.7 No Third Party Rights. Nothing herein express or implied is
---------------------
intended or shall be construed to confer upon or give any Person, other than the
parties hereto, any rights or remedies under or by reason of this Agreement.
13.8 Amendment and Waiver. This Agreement may be amended, modified or
--------------------
superseded, and any of the terms, covenants or conditions hereof may be waived,
at any time by a written instrument executed by the parties hereto or, in the
case of a waiver, by the party waiving compliance. The failure at any time of
any party hereto to require performance by another party of any responsibility
or obligation provided for in this Agreement shall in no way affect the full
right to require such performance at any time thereafter, nor shall the waiver
by any party of a breach of any provision of this Agreement by another party
constitute a waiver of the responsibility or obligation itself.
13.9 Construction and Representation by Counsel. The parties hereto
------------------------------------------
represent that in the negotiation and drafting of this Agreement they have been
represented by and relied upon the advice of counsel of their choice. The
parties affirm that their counsel have had a substantial role in the drafting
and negotiation of this Agreement and, therefore, the rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any Exhibit or
Schedule attached hereto.
13.10 Further Assurances. Each party shall, at the request of the
------------------
other party, at any time and from time to time following the Closing promptly
execute and deliver, or cause to be executed and delivered, to such requesting
party all such further instruments and take all such further action as may be
reasonably necessary or appropriate to more effectively transfer, assign,
convey, grant and confirm to the Purchaser, or to perfect or record the
Purchaser's title to or interest in, or to enable the Purchaser to possess or
otherwise to confirm or carry out the provisions of and transactions
contemplated by this Agreement.
13.11 Severability. If any one or more of the provisions contained in
------------
this Agreement or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired. In the case of any such
invalidity, illegality or unenforceability, the
51
<PAGE>
parties hereto agree to use their best efforts to achieve the purpose of such
provision by a new legally valid and enforceable stipulation.
13.12 Binding Effect; No Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable without the prior written
consent of each of the parties hereto or by operation of law.
13.13 Company's Knowledge. For purposes of this Agreement "knowledge"
-------------------
of the Company shall mean actual knowledge of James A. Cardwell, Joseph R.
Schillaci, James A. Cardwell, Jr., Robert Jaunich II, James A. Bondoux, David
Haug, Travis Roberts, David Latimer and Walter Fitzgerald or knowledge of such
persons of facts or circumstances that would lead a prudent person to
investigate and, more likely than not, acquire actual knowledge.
13.14 Fremont's Knowledge. For purposes of this Agreement "knowledge"
-------------------
of the Fremont partners shall mean actual knowledge of Robert Jaunich II, James
A. Bondoux, Timothy H. Hosking, Robert T. Evans and Michael D. Farr or knowledge
of such persons of facts or circumstances that would lead a prudent person to
investigate and, more likely than not, acquire actual knowledge.
13.15 Specific Performance. Each of the parties hereto agrees that
--------------------
either other of the parties hereto shall be entitled, in addition to any other
remedies or damages available to any of them in the event of any breach of this
Agreement to specific performance of the obligations of the other parties under
this Agreement.
13.16 Transactions Provided Hereby. The phrase "consummation of the
----------------------------
transactions contemplated hereby" and words of similar import shall mean the
closing of the purchase and sale of the Purchaser Interests pursuant to Section
1.2 of this Agreement and the consummation of the other transactions expressly
provided for by this Agreement and shall not include (i) the closing under the
Omnibus Agreement or any of the other transactions referred to only therein and
not in this Agreement, (ii) the closing under the Debt Financing, or (iii) the
Consent Solicitation.
13.17 Joint and Several Liability. All representations, warranties,
---------------------------
covenants, agreements and other obligations of the Purchasers, on the one hand,
and the Fremont Partners, on the other hand, hereunder shall be joint and
several in all respects.
52
<PAGE>
13.18 Limitation of Liability. No officer, director, stockholder,
-----------------------
partner or employee of any party to this Agreement shall have any liability to
any party arising out of this agreement or the transactions contemplated hereby.
13.19 Fremont Cap. In the event that the Closing does not occur as a
-----------
result of the breach of this Agreement by either of the Fremont Partners, the
maximum total liability for all Persons who comprise the Fremont Partners shall
not exceed $1,000,000; provided, however, that the foregoing limitation on
liability shall not apply in the event that (A) (i) the Fremont Partners
willfully breach Section 5.2 of this Agreement or (ii) the Fremont Partners
willfully breach any other material covenant of this Agreement and (B) within 12
months following the termination of this Agreement (other than a termination of
this Agreement by any of the Purchasers) the Fremont Partners or the Company
consummates a transaction that would constitute an Acquisition Proposal with a
Person with whom the Fremont Partners or the Company have had discussions
concerning an Acquisition Proposal prior to the date hereof.
53
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each
of the parties hereto as of the date first above written.
ROADSIDE, INC. SEQUOIA VENTURES INC.
By: /s/ ROBERT JAUNICH II By: /s/ ROBERT JAUNICH II
-------------------------- -------------------------
Name: Robert Jaunich II Name: Robert Jaunich II
------------------------ -----------------------
Title: President Title: Managing Director
----------------------- ----------------------
PETRO STOPPING CENTERS, L.P.
By: Petro, Inc., its
General Partner
By:/s/ J. A. Cardwell
--------------------------
Title: President
By: Roadside, Inc., its
General Partner
By:/s/ ROBERT JAUNICH II
---------------------------
Name: Robert Jaunich II
-------------------------
Title: President
------------------------
MOBIL LONG HAUL INC.
By:/s/ MARK A. SKOLNIK
--------------------------
Title: President
PETRO HOLDINGS GP CORP. PETRO HOLDINGS GP CORP.
By: /s/ TODD BERMAN By: /s/ TODD BERMAN
-------------------------- --------------------------
Title: President Title: President
54
<PAGE>
EXHIBIT 10.54
1996 ANNUAL MANAGEMENT INCENTIVE PLAN
<TABLE>
<CAPTION> %
SALARY
POSITION NAME RANGE
<S> <C> <C>
Chairman & C.E.O. Cardwell, Jack 75%
President & C.O.O. Schillaci, Joe 75%
Sr. V.P. & C.F.O. Finkbeiner, Rick 60%
V.P.- Operations Fitzgerald, Walt 60%
V.P.- Petro:Lube Latimer, Dave 60%
V.P.- Marketing & Strategic Planning Clark, Bill 50%
V.P. - General Counsel Vacant 40%
V.P. - Maintenance & Development Roberts, Travis 50%
V.P. - National Sales & Promotion Cardwell, Jim 50%
V.P. - Administration Burch, Phil 40%
V.P. - Planning & Control Kill, Chuck 30%
Controller Haug, David 30%
Director - Credit & Assistant Treasurer Caparis, Pete 20%
Director - Financial Planning & Analysis Vacant 20%
Director - MIS Tisdale, Richard 30%
Director - Petroleum Purchasing Williams, Grytch 20%
Director - Food Service & Executive Chef Norris, Al 40%
Director - Merchandising Patrick, Robert 40%
Director - Franchise Operations & Q.A. Runk, Ken 40%
Director - Fuel Operations Kirkpatrick, Keith 40%
Manager - Fuel Island Project Tipton, Dan N/A
Director - Advertising & Promotion Miller, Laurie 20%
Director - Corporte Training Pate, John 20%
Manager - Maintenance & Develop. Rudy, Clark 10%
Director - Risk Management Tovar, Dan 10%
Director - Branded Food Concepts Brehm, Dave 30%
Director - Field Accounting Vacant 20%
Manager - MIS Program Applications Vacant 0%
Manager - Professional Recruitment Kirby, Tom 20%
Manager - Food Service Quality Assurance Phelps, Van 20%
Manager - Merchandising Quality Assurance Hanssens, Bill 20%
Manager - Food Service Purchasing Hotchkiss, Kan 20%
Manager - Merchandise Purchasing Henning, Curtis 20%
Director - Petro:Lube Development Payne, Allen 20%
</TABLE>
<PAGE>
1/1/96 1996 ANNUAL MANAGEMENT INCENTIVE PLAN
<TABLE>
<CAPTION> MIN. TO % OR $
POSITION FREQUENCY CRITERIA ACHIEVE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FUEL MANAGER Quarterly Profit Center Controllable Profit 25% of Sales 4.00%
ISLAND Annual Profit Center Operating Contribution None 0.50%
Annual Location Operating Contribution Budget $ 1,600
ASSISTANT MANAGER (Pool) Quarterly Profit Center Controllable Profit 25% of Sales 2.68%
- -------------------------------------------------------------------------------------------------------------------------
TRAVEL MANAGER Quarterly Profit Center Controllable Profit 18% of Sales 4.00%
STORE Annual Profit Center Operating Contribution None 1.00%
Annual Location Operating Contribution Budget $ 1,600
ASSISTANT MANAGER (Pool) Quarterly Profit Center Controllable Profit 2.68%
- -------------------------------------------------------------------------------------------------------------------------
IRON MANAGER Quarterly Profit Center Controllable Profit 40% of Sales 2.00%
SKILLET Annual Profit Center Operating Contribution None 1.00%
Annual Location Operating Contribution Budget $ 1,600
KITCHEN MANAGER Quarterly Profit Center Controllable Profit 40% of Sales 0.50%
ASSISTANT MANAGER (Pool) Quarterly Profit Center Controllable Profit 40% of Sales 1.34%
- --------------------------------------------------------------------------------------------------------------------------
PETRO:2 MANAGER Quarterly Profit Center Controllable Profit 5% of Sales 4.00%
Annual Profit Center Operating Contribution None 0.50%
Annual Location Operating Contribution Budget $ 1,600
ASSISTANT MANAGER (Pool) Quarterly Profit Center Controllable Profit 5% of Sales 2.68%
- --------------------------------------------------------------------------------------------------------------------------
PETRO: MANAGER Quarterly Profit Center Operating Contribution Prior Year 0% to 5%
LUBE Annual Location Operating Contribution Budget $ 1,600
Annual Personal Performance Objectives Completion $ 2,000
ASSOCIATE Quarterly Profit Center Operating Contribution Prior Year 0% to 0.5%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Petro Financial, Inc.
Petro Distributing, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-30-1995
<PERIOD-END> DEC-31-1996
<CASH> 3,182
<SECURITIES> 0
<RECEIVABLES> 10,772
<ALLOWANCES> 321
<INVENTORY> 15,195
<CURRENT-ASSETS> 32,273
<PP&E> 189,989
<DEPRECIATION> 30,450
<TOTAL-ASSETS> 209,100
<CURRENT-LIABILITIES> 46,136
<BONDS> 0<F1>
0
0
<COMMON> 0
<OTHER-SE> 3,165
<TOTAL-LIABILITY-AND-EQUITY> 209,100
<SALES> 0
<TOTAL-REVENUES> 637,057
<CGS> 511,431
<TOTAL-COSTS> 592,953
<OTHER-EXPENSES> 31,601
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 21,263
<INCOME-PRETAX> (8,760)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,760)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,760)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>NOT SEPERATELY IDENTIFIED IN THE CURRENT FINANCIAL STATEMENTS OR ACCOMPANYING
NOTES THERETO.
</FN>
</TABLE>
