<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report August 6, 1999
PETRO STOPPING CENTERS, L.P.
Delaware 1-13018 74-2628339
---------------------- ------------ --------------------
(State of Incorporation) (Commission (IRS Employer Iden-
File Number) tification Number)
6080 Surety Drive, El Paso, Texas 79905
- ----------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
(915) 779-4711
-------------------
(Telephone Number)
<PAGE>
Item 1. Changes in Control of Registrant
On July 23, 1999, Petro Stopping Centers, L.P. (the "Company"),
certain of its partners and Volvo Trucks North America, Inc. ("Volvo")
consummated a transaction (the "Recapitalization") pursuant to which Petro
Stopping Centers Holdings, L.P. ("Holdings") was formed, and all of the present
owners in the Company, other than Petro Holdings GP Corp., Petro Holdings LP
Corp., each of which are affiliates of Chartwell Investments, Inc.
(collectively, "Chartwell") and Kirschner Investments ("Kirschner"), a company
franchisee, became owners in Holdings. Petro Holdings Financial Corporation
("Financial Holdings") was formed for the purpose of serving as co-issuer of New
Senior Discount Notes (as defined below) and the Company and it's subsidiary,
Petro Financial Corporation, became subsidiaries of Holdings. As part of the
Recapitalization, Volvo Petro Holdings, L.L.C. ("Volvo Trucks"), an affiliate of
Volvo, invested $30,000,000 to acquire common limited partnership interests in
Holdings while Mobil Long Haul, Inc. ("Mobil"), an affiliate of Mobil
Corporation, invested an additional $5,000,000 in convertible preferred
interests in Holdings. Holdings purchased the common interest in the Company
owned by affiliates of Chartwell for aggregate consideration of $69,800,000,
which consisted of a $55,000,000 cash payment and the issuance to Chartwell of
$14,800,000 in accreted value of 15.0% New Senior Discount Notes (as defined
below) due 2008, without Warrants. Holdings also purchased the common interests
in the Company owned by Kirschner for cash consideration of $2,800,000. J. A.
Cardwell, Sr., James A. Cardwell, Jr., Petro Inc. (a Corporation wholly owned by
J. A. Cardwell, Sr.) and JAJCO II, Inc. (a company owned by James A. Cardwell,
Jr.) (collectively, the "Cardwell Group") and Mobil maintained their capital
investments in Holdings.
As part of the Recapitalization, Holdings issued 82,707 Units each
consisting of $1,000 principal amount at stated maturity of 15% Senior Discount
Notes Due 2008 and 82,707 exchangeable Warrants ("New Senior Discount Notes").
Upon an exchange event, the Warrants will be exchanged, for no additional
consideration, for 100% of the common stock of Petro Warrant Holdings
Corporation ("Warrant Holdings"), whose sole asset is currently 10% of the
common limited partnership interests in Holdings. Neither Warrant Holdings nor
Financial Holdings will conduct any business other than issuance of the
Warrants and acting as the co-issuer of the New Senior Discount Notes,
respectively.
After giving effect to the Recapitalization, Holdings is the owner of
approximately 99% of the common limited partnership interests of the Company.
The common partnership interests of Holdings are owned by the Cardwell Group
(approximately 51.6%), Volvo Trucks (approximately 28.7%), Mobil (approximately
9.7%) and Warrant Holdings (approximately 10.0%) and the mandatorily redeemable
preferred partnership interests of the Company are owned by Mobil ($17,000,000)
and the Cardwell Group ($7,600,000). The Cardwell Group owns both general and
limited partnership interests in Holdings, while Volvo, Mobil and Warrant
Holdings own only limited partnership interests.
The Company also amended its senior collateralized credit facility
(the "Existing Senior Credit Facility" and, as amended, the "New Senior Credit
Facility") as part of the Recapitalization. The New Senior Credit Facility
consists of an $85,000,000 revolving credit facility and a $40,000,000 Term Loan
B. The proceeds of the New Term Loan B were used to repay amounts due under the
Term A and B Loans and the Expansion Facility of the Existing Senior Credit
Facility of approximately $38,271,000 plus accrued interest. The New Senior
Credit Facility is collateralized by substantially all of the Company's assets.
Item 7. Financial Statements and Exhibits
10.61 Partnership Interest Subscription and Purchase Agreement, dated as of
July 23, 1999, by and among Petro, Inc., Petro Holdings GP Corp.,
Petro Holdings LP Corp., Mobil Long Haul, Inc., James A. Cardwell,
Sr., James A. Cardwell, Jr., JAJCO II, Inc., Volvo Petro Holdings,
LLC, Petro Warrant Holdings Corporation and the Company.
1
<PAGE>
Item 7. Financial Statements and Exhibits (continued)
10.62 Fourth Amended and Restated Limited Partnership Agreement of the
Company, a Delaware Limited Partnership, dated July 23, 1999, by and
among Petro Inc., as a General Partner and Petro Stopping Centers
Holdings, L.P., Petro Holdings GP, L.L.C. and James A. Cardwell, Jr.,
as Limited Partners.
10.63 Limited Partnership Agreement of Petro Stopping Centers Holdings,
L.P., a Delaware Limited Partnership, dated July 15, 1999, by and
among Petro, Inc., as General Partner and James A. Cardwell, Sr.,
James A. Cardwell, Jr., JAJCO II, Inc., Petro, Inc., Mobil Long Haul
Inc., Volvo Petro Holdings, LLC and Petro Warrant Holdings
Corporation, as Limited Partners.
10.64 Second Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of July 23, 1999, among the Company, BankBoston,
N.A. (formerly known as The First National Bank of Boston) and the
other lending institutions listed as Fleet Business Credit
Corporation, Merrill Lynch Prime Rate Portfolio, Merrill Lynch Senior
Floating Rate Fund, Inc., Morgan Stanley Dean Witter Prime Income
Trust, Natexis Banque, KZH Crescent-3 LLC, KZH Crescent-2 LLC, KZH
Crescent LLC, United of Omaha Life Insurance Company, Sequils I, Ltd.,
Wells Fargo Bank, N.A. and BankBoston, N.A. (formerly known as The
First National Bank of Boston), as Agent, Union Bank of California,
N.A., as Co-Agent, First Union National Bank, as Documentation Agent
and BancBoston Robertson Stephens Inc., as Arranger.
10.65 PMPA Motor Fuels Franchise Agreement, dated July 23, 1999, by and
between Mobil Oil Corporation and the Company.
10.66 Master Supply Contract for Resale of Oils and Greases, dated July 23,
1999, by and between Mobil Oil Corporation and the Company.
10.67 Press Release of the Company, dated July 29, 1999.
10.68 Press Release of the Company, dated March 18, 1999.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PETRO STOPPING CENTERS, L.P.
(Registrant)
Date: August 6, 1999 /s/ David A. Appleby
----------------------
David A. Appleby
Vice President of Finance
(Chief Accounting Officer)
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
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Exhibit Description Page
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<S> <C>
10.61 Partnership Interest Subscription and Purchase Agreement, dated as of July 23, 1999,
by and among Petro, Inc., Petro Holdings GP Corp., Petro Holdings LP Corp., Mobil
Long Haul, Inc., James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc.,
Volvo Petro Holdings, LLC, Petro Warrant Holdings Corporation and the Company. 6
- -----------------------------------------------------------------------------------------------------------------------
10.62 Fourth Amended and Restated Limited Partnership Agreement of the Company, a Delaware
Limited Partnership, dated July 23, 1999, by and among Petro, Inc., as a General
Partner and Petro Stopping Centers Holdings, L.P., Petro Holdings GP, L.L.C. and
James A. Cardwell, Jr., as Limited Partners. 65
- -----------------------------------------------------------------------------------------------------------------------
10.63 Limited Partnership Agreement of Petro Stopping Centers Holdings, L.P., a Delaware
Limited Partnership, dated July 15, 1999, by and among Petro, Inc., as General
Partner and James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc., Petro,
Inc., Mobil Long Haul Inc., Volvo Petro Holdings, LLC and Petro Warrant Holdings
Corporation, as Limited Partners. 111
- -----------------------------------------------------------------------------------------------------------------------
10.64 Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of
July 23, 1999, among the Company, BankBoston, N.A. (formerly known as The First
National Bank of Boston) and the other lending institutions listed as Fleet Business
Credit Corporation, Merrill Lynch Prime Rate Portfolio, Merrill Lynch Senior Floating
Rate Fund, Inc., Morgan Stanley Dean Witter Prime Income Trust, Natexis Banque, KZH
Crescent-3 LLC, KZH Crescent-2 LLC, KZH Crescent LLC, United of Omaha Life Insurance
Company, Sequils I, Ltd., Wells Fargo Bank, N.A. and BankBoston, N.A. (formerly known as
The First National Bank of Boston), as Agent, Union Bank of California, N.A., as Co-Agent,
First Union National Bank, as Documentation Agent and BancBoston Robertson Stephens Inc.,
as Arranger. 176
- -----------------------------------------------------------------------------------------------------------------------
10.65 PMPA Motor Fuels Franchise Agreement, dated July 23, 1999, by and between Mobil Oil
Corporation and the Company. 313
- -----------------------------------------------------------------------------------------------------------------------
10.66 Master Supply Contract for Resale of Oils and Greases, dated July 23, 1999, by and
between Mobil Oil Corporation and the Company. 350
- -----------------------------------------------------------------------------------------------------------------------
10.67 Press Release of the Company, dated July 29, 1999. 366
- -----------------------------------------------------------------------------------------------------------------------
10.68 Press Release of the Company, dated March 18, 1999. 369
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Exhibit 10.61
- --------------------------------------------------------------------------------
PARTNERSHIP INTEREST SUBSCRIPTION AND PURCHASE AGREEMENT
dated as of July 23, 1999
By and Among
Petro, Inc., Petro Holdings GP Corp., Petro Holdings LP Corp., Mobil Long
Haul, Inc.,
James A. Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc., Volvo Petro
Holdings, LLC, Petro Warrant Holdings Corporation
and
Petro Stopping Centers, L.P.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
PARTNERSHIP INTEREST SUBSCRIPTION AND PURCHASE AGREEMENT...................... 1
ARTICLE I PURCHASE OF AND SUBSCRIPTION FOR THE PARTNERSHIP INTERESTS......... 3
1.1 Definitions............................................... 3
1.2 Index of Other Defined Terms.............................. 6
1.3 Purchase; Subscription.................................... 6
1.4 Closing ................................................ 7
1.5 Partnership Agreement..................................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER......................... 8
2.1 Organization and Authority: Validity: No Conflict......... 8
2.2 Good Title................................................ 8
2.3 No Prior Activities....................................... 8
2.4 Filing of Returns......................................... 9
2.5 Liens ................................................ 9
2.6 Tax Returns............................................... 9
2.7 Tax Deficiencies; Audits; Statutes of Limitations......... 10
2.8 Special Tax Status........................................ 10
2.9 No Withholding............................................ 10
2.10 Tax Status of Seller LLC................................. 10
2.11 Accredited Investor...................................... 10
2.12 Investment............................................... 10
2.13 No Public Market......................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................... 11
3.1 Organization and Authority; Validity...................... 11
3.2 Subsidiaries.............................................. 12
3.3 Capitalization............................................ 12
3.4 Conflicts; Defaults....................................... 13
3.5 Litigation................................................ 14
3.6 Absence of Changes........................................ 14
3.7 No Undisclosed Liabilities................................ 14
3.8 SEC Documents............................................. 14
3.9 Environmental Matters..................................... 14
3.10 Financial Statements..................................... 15
</TABLE>
i
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<TABLE>
<CAPTION>
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<S> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS.................... 16
4.1 Accredited Investor............................................... 16
4.2 Investment........................................................ 16
4.3 No Public Market.................................................. 16
4.4 Organization; Authority; Validity................................. 17
4.5 Good Title........................................................ 17
ARTICLE V COVENANTS OF THE HOLDING PARTNERS, THE COMPANY, SELLER
AND THE SUBSCRIBERS................................................... 17
5.1 Reasonable Best Efforts........................................... 17
5.2 Further Assurances................................................ 17
5.3 Access to Properties and Records.................................. 18
5.4 Formation of Holdings; Contribution by Holding Partners........... 18
5.5 Discount Note Financing........................................... 18
5.6 Formation of Seller LLC; Merger of Petro GP into Seller LLC....... 18
5.7 Supplemental Indenture............................................ 18
5.8 Bank Financing.................................................... 18
ARTICLE VI TAX MATTERS.......................................................... 18
6.1 Tax Elections..................................................... 18
6.2 Preparation of Returns and Payment of Taxes....................... 19
6.3 Nonforeign Affidavit.............................................. 19
6.4 Cooperation and Records Retention................................. 19
6.5 Access to Records................................................. 19
6.6 Closing Tax Return and Allocations................................ 19
6.7 Value of Assets of Holdings and the Company....................... 20
6.8 Taxes Owed by Seller.............................................. 20
6.9 Transfer Taxes.................................................... 20
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING..................................... 20
7.1 Conditions Precedent to the Obligations of the Subscribers........ 20
7.2 Conditions Precedent to the Obligations of Seller................. 23
7.3 Conditions Precedent to the Obligations of the Holding Partners... 23
7.4 Conditions Precedent to the Obligations of the Company............ 25
7.5 Conditions Precedent to the Obligations of All Parties............ 25
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION....................................................... 27
8.1 Survival of Representations and Warranties........................ 27
8.2 Indemnification by Seller......................................... 27
8.3 Indemnification by Subscribers.................................... 29
</TABLE>
ii
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<TABLE>
<CAPTION>
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<S> <C>
8.4 Indemnification by the Company............................ 30
8.5 Indemnification by Holdings............................... 30
8.6 Limitation................................................ 30
8.7 Indemnity Procedure....................................... 30
8.8 Agreement with Respect to Schedule 8.8 Items.............. 31
ARTICLE IX TERMINATION................................................... 32
9.1 Grounds for Termination.................................... 32
9.2 Effect of Termination...................................... 33
ARTICLE X MISCELLANEOUS.................................................. 33
10.1 Costs and Expenses........................................ 33
10.2 Notices................................................... 33
10.3 Counterparts; Facsimile................................... 35
10.4 Entire Agreement.......................................... 35
10.5 Captions.................................................. 36
10.6 Governing Law............................................. 36
10.7 No Third Party Rights..................................... 36
10.8 Amendment and Waiver...................................... 36
10.9 Construction and Representation by Counsel................ 36
10.10 Further Assurances....................................... 36
10.11 Binding Effect; No Assignment............................ 36
10.12 Specific Performance..................................... 36
10.13 Limitation of Liability.................................. 37
10.14 Arbitration.............................................. 37
10.15 Confidentiality.......................................... 38
10.16 Public Disclosure........................................ 38
</TABLE>
iii
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section Page
<S> <C> <C>
AAA........................................................ Section 10.15................................... 37
Agreement.................................................. Preamble........................................ 1
Allocation Schedule........................................ Section 6.7..................................... 20
Business Day............................................... Section 1.4(a).................................. .7
Cardwell Jr................................................ Preamble........................................ 1
Cardwell Partners.......................................... Preamble........................................ 1
Cardwell Sr................................................ Preamble........................................ 1
Closing.................................................... Section 1.4(a).................................. 7
Closing Date............................................... Section 1.4(a).................................. 7
Closing K-1................................................ Section 6.6..................................... 20
Company.................................................... Preamble........................................ 1
Damages.................................................... Section 8.2(a).................................. 27
Date of Notice of Claim.................................... Section 8.7..................................... 31
Disclosing Party........................................... Section 10.15................................... 38
Disputing Parties.......................................... Section 10.15................................... 37
Disputing Party............................................ Section 10.15................................... 37
Environmental Permits...................................... Section 3.9(a).................................. 14
Expenses................................................... Section 2.3..................................... 8
Holding Partners........................................... Recitals........................................ 1
Holdings................................................... Recitals........................................ 1
Indemnitee................................................. Section 8.7(a).................................. 30
Indemnitor................................................. Section 8.7(a).................................. 30
Information................................................ Section 10.15................................... 38
JAJCO...................................................... Preamble........................................ 1
Kirschner.................................................. Recitals........................................ 2
Kirschner Interest......................................... Recitals........................................ 2
Liens...................................................... Section 2.2..................................... 8
Limited Partnership Interest............................... Recitals........................................ 1
Members.................................................... Section 2.12.................................... 10
Mobil...................................................... Preamble........................................ 1
Mobil Class A Preferred Limited Partner Interest........... Recitals........................................ 1
Mobil Class B Preferred Limited Partner Interest........... Recitals........................................ 1
Mobil Interests............................................ Recitals........................................ 1
Mobil Limited Partner Interest............................. Recitals........................................ 1
Notice of Claim............................................ Section 8.7(a).................................. 30
Partner Insurance Policy................................... Section 7.5..................................... 26
Partnership Agreement...................................... Section 1.4(b).................................. 7
Petro...................................................... Preamble........................................ 1
Petro GP................................................... Preamble........................................ 1
Pre-Change Period.......................................... Section 6.6..................................... 20
Receiving Party............................................ Section 10.15................................... 38
Registration Rights Agreement.............................. Section 7.2(a).................................. 23
SEC Documents.............................................. Section 3.8..................................... 14
Seller..................................................... Preamble........................................ 1
Seller Interests........................................... Recitals........................................ 2
Seller LLC................................................. Recitals........................................ 2
Seller LLC Interest........................................ Recitals........................................ 2
Seller Note................................................ Section 1.3(a).................................. 6
Stockholder................................................ Section 2.12.................................... 10
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
Subscribers................................................ Preamble......................................... 1
Tax Indemnitees............................................ Section 8.2(b)................................... 28
Volvo...................................................... Preamble......................................... 1
Volvo Limited Partner Interest............................. Recitals......................................... 1
Warrant Holdings........................................... Preamble......................................... 1
</TABLE>
v
<PAGE>
EXHIBITS
--------
Exhibit A-1 Items to be Addressed in Opinion of Counsel to Seller
Exhibit A-2 Items to be Addressed in Opinion of Tax Counsel to Seller
Exhibit B-1 Items to be Addressed in Opinion of Counsel to Holdings
delivered to Mobil, Volvo and Seller
Exhibit B-2 Items to be Addressed in Opinion of Counsel to Holdings
delivered to Seller
Exhibit B-3 Items to be Addressed in Opinion of Counsel to the Company
delivered to Volvo
Exhibit C-1 Items to be Addressed in Opinion of Counsel to Mobil
Exhibit C-2 Items to be Addressed in Opinion of Counsel to Volvo
Exhibit D Supplemental Indenture
Exhibit E-1 Fourth Amended and Restated Partnership Agreement
Exhibit E-2 Holdings Partnership Agreement
Exhibit F Volvo Joint Operating and Supply Agreement
Exhibit G-1 Partnership Interest Assignment and Assumption Agreement
Exhibit G-2 Seller Limited Partner Interest Assignment and Assumption
Agreement
Exhibit G-3 Seller LLC Interest Assignment and Assumption Agreement
Exhibit H Bank Financing and Commitment Letter
Exhibit I-1 Holdings' Certificate to Volvo
Exhibit I-2 Holdings' Certificate to Seller
Exhibit J Mobil Fueling Agreement
Exhibit K Mobil Lube Agreement
Exhibit L Kirschner Purchase Agreement
Exhibit M Terms of Environmental Insurance Policy
Exhibit N Registration Rights Agreement
SCHEDULES
---------
Schedule 2.2 Title
Schedule 2.4 Filing of Returns
Schedule 3.3 Capitalization
Schedule 3.4 Conflicts; Defaults
Schedule 3.5 Litigation
Schedule 3.9 Environmental Matters
Schedule 7.5 Consents
Schedule 8.8 Certain Environmental Items
vi
<PAGE>
PARTNERSHIP INTEREST SUBSCRIPTION
---------------------------------
AND PURCHASE AGREEMENT
----------------------
This PARTNERSHIP INTEREST SUBSCRIPTION AND PURCHASE AGREEMENT (the
"Agreement") is made and entered into this 23rd day of July, 1999, by and among
- ----------
Petro, Inc., a Texas corporation ("Petro"), Petro Holdings LP Corp., a Delaware
-----
corporation ("Seller"), Petro Holdings GP Corp., a Delaware corporation ("Petro
------ -----
GP"), Petro Stopping Centers, L.P., a Delaware limited partnership (the
- --
"Company"), Mobil Long Haul, Inc., a Delaware corporation ("Mobil"), James A.
------- -----
Cardwell, Sr. ("Cardwell Sr."), James A. Cardwell, Jr. ("Cardwell Jr."), JAJCO
------------ ------------
II, Inc., a Delaware corporation ("JAJCO," and together with Petro, Cardwell Sr.
and Cardwell Jr., the "Cardwell Partners"), Volvo Petro Holdings, LLC, a
-----------------
Delaware limited liability company ("Volvo", and together with Mobil, the
-----
"Subscribers"), and Petro Warrant Holdings Corporation, a Delaware corporation
- ------------
("Warrant Holdings").
----------------
RECITALS
A. WHEREAS, in connection with the consummation of the transactions
contemplated herein, Mobil, Volvo, Warrant Holdings and the Cardwell Partners
(such Partners, the "Holding Partners") shall form Petro Stopping Centers
----------------
Holdings, L.P., a Delaware limited partnership ("Holdings");
--------
B. WHEREAS, each of the Cardwell Partners and Mobil shall contribute all
or a portion of their respective common limited partnership and preferred
limited partnership interests, as applicable, in the Company to Holdings in
exchange for a common limited partnership interest or Class A preferred limited
partnership interest in Holdings, as the case may be;
C. WHEREAS, as a result of the contribution transaction described in
paragraph B above, Mobil shall own a common limited partnership interest in
Holdings (the "Mobil Limited Partner Interest") and a Class A preferred limited
------------------------------
partnership interest in Holdings (the "Mobil Class A Preferred Limited Partner
---------------------------------------
Interest");
- --------
D. WHEREAS, Mobil desires to invest an additional five million dollars
($5,000,000) in cash in exchange for a Class B preferred limited partnership
interest in Holdings (the "Mobil Class B Preferred Limited Partner Interest",
------------------------------------------------
and, together with the Mobil Limited Partner Interest and the Mobil Class A
Preferred Limited Partner Interest, the "Mobil Interests");
---------------
E. WHEREAS, Volvo desires to invest thirty million dollars ($30,000,000)
in cash in exchange for a common limited partnership interest in Holdings (the
"Volvo Limited Partner Interest");
- -------------------------------
F. WHEREAS, Warrant Holdings desires to invest nine million seven hundred
thousand dollars ($9,700,000) in cash in exchange for a common limited
partnership interest in Holdings (the "Warrant Holdings Interest");
1
<PAGE>
G. WHEREAS, Seller owns a common limited partnership interest in the
Company (the "Seller Limited Partnership Interest");
-----------------------------------
H. WHEREAS, in connection with the consummation of the transactions
contemplated herein, Petro GP, a wholly-owned subsidiary of Seller, which owns a
general partner percentage interest in the Company, shall merge with and into
Petro Holdings GP, L.L.C., a Delaware limited liability company and a wholly-
owned subsidiary of Seller ("Seller LLC"), with Seller LLC as the surviving
----------
entity;
I. WHEREAS, Seller will own 100% of the outstanding membership interests
of Seller LLC (the "Seller LLC Interest," and together with the Seller Limited
-------------------
Partnership Interest, the "Seller Interests");
----------------
J. WHEREAS, Holdings desires to purchase the Seller Interests from Seller
in exchange for fifty-five million dollars ($55,000,000) in cash and a senior
discount note with an Accreted Value on the date of issuance of fourteen
million, eight hundred twenty-nine thousand, eight hundred fifty-three dollars
($14,829,853), constituting an aggregate purchase price equal to sixty-nine
million, eight hundred twenty-nine thousand, eight hundred fifty-three dollars
($69,829,853);
K. WHEREAS, Kirschner Investments, a Pennsylvania general partnership
("Kirschner") owns a common limited partnership interest in the Company (the
"Kirschner Interest");
- -------------------
L. WHEREAS, Holdings shall purchase the Kirschner Interest from Kirschner
pursuant to the terms of the Kirschner Purchase Agreement;
M. WHEREAS, the parties hereto are entering into this Agreement to provide
for such subscription of partnership interests by Mobil, Volvo and Warrant
Holdings, and the purchase of the Seller Interests, and to establish certain
rights and obligations in connection therewith; and
N. WHEREAS, the Third Amended and Restated Partnership Agreement of the
Company shall be amended and restated at the Closing to reflect the transactions
contemplated herein, and to reflect such other modifications as agreed upon by
the parties thereto.
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:
2
<PAGE>
ARTICLE I
PURCHASE OF AND SUBSCRIPTION FOR
---------------------------------
THE PARTNERSHIP INTERESTS
-------------------------
1.1 Definitions The following terms, as used herein, have the following
-----------
definitions:
"Accreted Value" has the meaning ascribed to such term in the indenture
--------------
relating to the Discount Note Financing.
"Bank Financing" means the new credit agreement, dated as of the Closing
--------------
Date, by and among the Company and the other parties set forth on the signature
pages thereto, pursuant to the commitment letter attached hereto as Exhibit H.
---------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Confidentiality Agreements" means that certain (a) Confidentiality
--------------------------
Agreement dated as of December 23, 1998, by and between the Company and Volvo
and (b) Environmental Confidentiality Agreement dated as of March 8, 1999 by and
between the Company and Volvo.
"Discount Note Financing" means the offering by Holdings of Senior Discount
-----------------------
Notes with an Accreted Value on the date of issuance of fifty-four million,
eight hundred twenty-nine thousand, eight hundred fifty-three dollars
($54,829,853) pursuant to Rule 144A under the Securities Act.
"Environmental Laws" means all applicable federal, state and local laws,
------------------
rules, regulations, codes, ordinances, orders, decrees, directives, permits,
licenses and judgments relating to pollution, contamination or protection of the
environment, ensuring public health and safety from environmental hazards,
management and storage of Hazardous Materials, and all other laws relating to
the use, treatment, storage, disposal, handling or transportation of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA, as amended), the Clean Air
Act, the Clean Water Act, the Solid Wastes Disposal Act (as amended by the
Resources Conservation and Recovery Act), the Toxic Substances Control Act, the
Emergency Planning and Community Right to Know Act, the Safe Drinking Water Act
and any and all regulations issued under each of such statutes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Fourth Amended and Restated Partnership Agreement" means that certain
-------------------------------------------------
Fourth Amended and Restated Partnership Agreement of the Company dated as of the
Closing Date, by and among the parties set forth on the signature pages thereto.
3
<PAGE>
"GAAP" means generally accepted accounting principles in effect in the
----
United States of America at the time of determination, and which are
consistently applied.
"Group" shall mean, individually and collectively, (a) Seller LLC, as
-----
successor to Petro GP, (b) Petro GP, (c) Seller, and (d) any individual, trust,
corporation, partnership, limited liability company or any other entity as to
which Seller General Partner is liable for Taxes incurred by such individual or
entity either as a transferee, or pursuant to Treasury Regulations Section
1.1502-6, or pursuant to any other provision of federal, territorial, state,
local or foreign law or regulations.
"Hazardous Materials" mean any dangerous, toxic or hazardous pollutant,
-------------------
contaminant, chemical, waste, material or substance, including but not limited
to gasoline, diesel fuels, waste oils or other petroleum products, as defined in
or governed by the Environmental Laws.
"Holdings Partnership Agreement" means that certain Partnership Agreement
------------------------------
of Holdings dated as of the Closing Date, by and among the parties set forth on
the signature pages thereto.
"Indenture" means the Company's indenture dated as of February 1, 1997
---------
relating to the Company's 10 1/2 Senior Notes due 2007.
"Kirschner Purchase Agreement" means that certain Kirschner Partnership
----------------------------
Interest Purchase Agreement dated as of the Closing Date, by and between
Kirschner and Holdings.
"Knowledge" means the actual knowledge of the executive officers of the
---------
Company, after reasonable inquiry. With respect to environmental
representations and warranties set forth in Section 3.9, "Knowledge" includes
the actual knowledge of Clark Rudy and Travis Roberts.
"Material Adverse Effect" means a (a) material adverse effect on the
-----------------------
ability of the Company to consummate the transactions contemplated hereby or (b)
a material adverse effect on the results of operations or financial condition of
the Company and its subsidiaries, taken as a whole.
"Mobil Fueling Agreement" means that certain PMPA Mobil Fuel Franchise
-----------------------
Agreement dated as of the Closing Date, by and between Mobil Oil and the
Company.
"Mobil Lube Agreement" means that certain Master Supply Agreement for
--------------------
Resale of Oils and Greases dated as of the Closing Date, by and between Mobil
Oil and the Company.
"Mobil Oil" means Mobil Oil Corporation, a New York corporation.
---------
"Partners" has the meaning given to it in the Partnership Agreement.
--------
"Proceeding" means any action, suit, claim, demand, hearing, arbitration,
----------
proceeding (public or private) or governmental investigation that has been
brought by or against any governmental body or any other person.
4
<PAGE>
"Real Property" means all real property owned or leased by the Company in
-------------
connection with the operation of its business.
"Recapitalization" means (a) the formation of Holdings, and the admission
----------------
of all of the Holding Partners to Holdings; (b) the equity investments in
Holdings by Volvo and Mobil pursuant to this Agreement; and (c) the purchase by
Holdings of the Seller Interests and the Kirschner Interest, all in accordance
with the terms and conditions of this Agreement.
"Release" means the spilling, leaking, disposing, discharging, emitting,
-------
depositing, ejecting, leaching, escaping or any other release or threatened
release, however defined, whether intentional or unintentional, of any Hazardous
Material.
"Returns" shall mean all reports, estimates, declarations of estimated tax,
-------
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller General Partner" means Petro GP and, subsequent to the merger of
----------------------
Petro GP into Seller LLC, Seller LLC, as the successor to Petro GP.
"Senior Discount Notes" means the Discount Notes to be issued in the
---------------------
Discount Note Financing.
"Supplemental Indenture" means the supplemental indenture dated as of July
----------------------
23, 1999, amending the Indenture.
"Taxes" shall mean all taxes, however denominated, including any interest,
-----
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
the Group is required to pay, withhold or collect.
"Volvo Operating Agreement" means that certain Joint Operating and Supply
-------------------------
Agreement dated as of the Closing Date, by and between Volvo Parent and the
Company.
5
<PAGE>
"Volvo Parent" means Volvo Trucks North America, Inc., a Delaware
------------
corporation.
1.2 Index of Other Defined Terms. In addition to the terms defined above,
----------------------------
the terms set forth on the Table of Defined Terms on page (iii) hereto shall
have the respective meanings given thereto in the sections indicated therein.
1.3 Purchase; Subscription. At the Closing, upon the terms and subject to
----------------------
the conditions of this Agreement
(a) Purchase of Seller Interests. At the Closing, upon the terms and
----------------------------
subject to the conditions set forth herein, the Holding Partners shall cause
Holdings to purchase the Seller Interests by payment to Seller, (i) by wire
transfer of immediately available funds, fifty-five million dollars
($55,000,000) in cash, and (ii) the issuance of a promissory note (the "Seller
------
Note"), in registered form for purposes of Sections 871(h)(2)(B)(i) and
- ----
881(c)(2)(B)(i) of the Code, with an Accreted Value on the date of issuance of
fourteen million, eight hundred twenty-nine thousand, eight hundred fifty-three
dollars ($14,829,853) with terms identical to those of, and under the same
indenture and CUSIP number and with the same registration and other features as,
the Senior Discount Notes to be issued in the Discount Note Financing (except
that the Seller Note shall not have warrants attached thereto) for the Seller
Limited Partnership Interest and the Seller LLC Interest (provided that the
--------
payment of the $55,000,000 in cash and the issuance of the Seller Note shall be
allocated pro rata between the Seller Limited Partnership Interest and the
Seller LLC Interest), constituting an aggregate amount equal to sixty-nine
million, eight hundred twenty-nine thousand, eight hundred fifty-three dollars
($69,829,853), and Seller shall surrender the Seller Interests to Holdings and
execute the Seller Limited Partner Interest Assignment and Assumption Agreement
and the Seller LLC Interest Assignment and Assumption Agreement attached hereto
as Exhibits H-2 and H-3, respectively, and shall thereafter cease to be a
------------ ---
partner in the Company and a member of the Seller LLC, it being understood that
if the private placement of Senior Discount Notes is oversubscribed and there
is, in the opinion of Holdings, sufficient unsatisfied demand to permit the sale
of the Seller Note, such Seller Note shall be offered, if desired by Seller,
and, if subscribed for in whole or in part, Seller shall receive cash at the
Closing in lieu of all or such portion of the Seller Note equal to the net
proceeds of such Seller Note.
(b) Contribution of Partnership Interests by Cardwell Partners and
--------------------------------------------------------------
Mobil to Holdings. At the Closing, upon the terms and subject to the conditions
- -----------------
set forth herein, each of the Cardwell Partners and Mobil shall contribute all
or a portion of their respective common limited partnership and preferred
limited partnership interests, as applicable, in the Company to Holdings in
exchange for a common limited partnership interest or Class A preferred limited
partnership interest in Holdings, as the case may be;
(c) Investment by Mobil. At the Closing, upon the terms and subject
-------------------
to the conditions set forth herein, the Holding Partners shall cause Holdings to
issue and deliver to Mobil the Mobil Class B Preferred Limited Partner Interest,
and Mobil shall pay to Holdings, by wire transfer of immediately available
funds, five million dollars ($5,000,000) in cash;
6
<PAGE>
(d) Investment by Volvo. At the Closing, upon the terms and subject
-------------------
to the conditions set forth herein, the Holding Partners shall cause Holdings to
issue and deliver to Volvo the Volvo Limited Partner Interest and Volvo shall
pay to Holdings, by wire transfer of immediately available funds, thirty million
dollars ($30,000,000) in cash; and
(e) Purchase of Kirschner Interest. At the Closing, upon the terms
------------------------------
and subject to the conditions set forth herein, the Holding Partners shall cause
Holdings to purchase the Kirschner Interest in accordance with the Kirschner
Purchase Agreement and Kirschner shall thereafter cease to be a partner in the
Company.
(f) Investment by Warrant Holdings. At the Closing, upon the terms
------------------------------
and subject to the conditions set forth herein, the Holding Partners shall cause
Holdings to issue and deliver to Warrant Holdings the Warrant Holdings Interest
and Warrant Holdings shall pay to Holdings, by wire transfer of immediately
available funds, nine million seven hundred thousand dollars ($9,700,000) in
cash.
1.4 Closing.
-------
(a) Location; Date. Subject to the conditions set forth in Article
--------------
VII, unless this Agreement shall have been terminated pursuant to the provisions
of Section 9.1 hereof, the closing (the "Closing") of the transactions
-------
contemplated by this Agreement shall take place at the offices of Gibson, Dunn &
Crutcher LLP, 200 Park Avenue, New York, New York 10166-0193 on July 22, 1999,
or, in the event that the conditions set forth in Article VII will not have been
satisfied or waived by such date, on the third Business Day following the date
that each of the conditions set forth in Article VII 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) Amendment to Partnership Agreement. At the Closing, after the
----------------------------------
purchase of the Seller Interests, upon the terms and subject to the conditions
set forth herein, the Third Amended and Restated Limited Partnership Agreement
of Petro Stopping Centers, L.P., dated as of January 30, 1997 (the "Partnership
-----------
Agreement") shall be amended to reflect the consummation of the transactions
- ---------
contemplated by this Agreement and to reflect such other modifications and
consents as agreed upon by the parties thereto.
(c) Holdings Partnership Agreement. At the Closing, upon the terms
------------------------------
and subjects to the conditions set forth herein, the Holding Partners shall
enter into the Holdings Partnership Agreement.
(d) Further Assurances. On and after the Closing Date, the parties
------------------
hereto shall enter into, execute and deliver such other and further agreements,
documents and instruments, as any of them may reasonably request, for the
purpose of effectuating the transactions contemplated by this Agreement, in each
case upon the terms and conditions of Article VII below.
7
<PAGE>
1.5 Partnership Agreement. The parties hereto agree and acknowledge that
---------------------
the transactions contemplated by this Agreement shall be exempt from and shall
not trigger, be governed by or give effect to, any of the provisions contained
in Article IX of the Partnership Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller hereby represents and warrants to Holdings and Volvo as follows:
2.1 Organization and Authority; Validity. Seller is a corporation, duly
------------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, Petro GP is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and, upon its formation,
Seller LLC will be a limited liability company, duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller 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 Seller. This Agreement has been duly executed by
Seller and, assuming due execution by the other parties set forth on the
signature pages hereto, is a legal, valid and binding obligation of Seller,
enforceable against Seller 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).
2.2 Good Title. Seller owns beneficially and of record the Seller Limited
----------
Partnership Interest and will own, upon the merger of Petro GP into Seller LLC,
the LLC Interest, Petro GP owns beneficially and of record a .98% general
partner interest in the Company, and Seller LLC will own, upon the merger of
Petro GP into Seller LLC, such .98% general partner interest in the Company, in
each case, free and clear of all claims, charges, liens, security interests,
pledges, restrictions or encumbrances of any nature whatsoever (collectively,
"Liens"), other than as set forth on Schedule 2.2. The transfer and delivery
----- ------------
of the Seller Interests to Holdings as contemplated by this
Agreement will, upon consummation of the Closing, transfer good and marketable
title thereto to Holdings, free and clear of all Liens.
2.3 No Prior Activities. Other than arising out of and relating solely
-------------------
to Petro GP's and Seller LLC's status as a general partner of the Company, Petro
GP has not, and, upon its formation and merger with Petro GP, and up until the
Closing, Seller LLC shall not have, incurred any obligation or liability
(whether accrued, absolute or contingent, and whether due or to become due)
other than (a) under this Agreement, (b) for Taxes and (c) for administrative
expenses incurred in the ordinary course of business (those expenses referenced
in (c), collectively, "Expenses"), which Expenses shall not be in excess of
--------
$200,000 per year and all of which Expenses and obligations referenced in (a)
above shall have been paid in full on or before
8
<PAGE>
the Closing Date. Petro GP is, and always has been and, upon its formation,
Seller LLC will be and always will have been, a single-purpose entity to own and
hold a general partner percentage interest in the Company for the benefit of
Seller and, except for such general partner percentage interests, has not owned,
leased, had the right to use or used any property, whether real, personal or
mixed, and has not engaged in any business or activity of any type or kind
whatsoever or entered into any agreement or arrangement with any person, in each
instance other than under this Agreement and other than arising out of and
relating solely to its status as a general partner of the Company or for
Expenses, which Expenses shall not be in excess of $200,000 per year and all of
which Expenses and obligations referenced in (a) above shall have been paid in
full on or before the Closing Date. Petro GP has no employees and does not owe
any compensation, fees, or any other employee benefits to any director or
officer of Petro GP or to any other person other than arising solely out of or
relating solely to its status as a general partner of the Company. Upon its
formation and merger with Petro GP and up until the Closing, Seller LLC will
have no employees and will not owe any compensation fees, or any other employee
benefits to any director or officer of Seller LLC or to any other person other
than arising solely out of or relating solely to its status as a general partner
of the Company.
2.4 Filing of Returns. Except as provided in Schedule 2.4, all Returns
----------------- ------------
required to be filed by or on behalf of members of the Group have been duly
filed in a manner consistent with the Schedule K-1s (or equivalent forms) issued
by the Company to the Group, and such Returns are true, complete and correct in
all material respects. Except as provided in Schedule 2.4, all Taxes payable on
------------
the Returns or on subsequent assessments with respect thereto have been paid in
full, and no other Taxes or penalties are payable by the Group with respect to
items or periods covered by such Returns (whether or not shown on or reportable
on such Returns) or with respect to any period prior to the date of this
Agreement, other than Taxes which are not yet due. Each member of the Group has
withheld and paid over all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in connection
with amounts paid or owing to any employee, creditor, independent contractor, or
other third party. Except as set forth on Schedule 2.4, an extension of time
------------
within which to file any such Return which has not been filed has not been
requested or granted.
2.5 Liens. Other than Liens for Taxes of the Company arising out of, and
-----
relating solely to, the Seller General Partner's status as a general partner of
the Company, there are no Liens on any of the assets of Seller General Partner
with respect to Taxes, other than Liens for Taxes not yet due and payable or for
Taxes that a member of the Group is contesting in good faith through appropriate
proceedings and for which appropriate reserves have been established.
2.6 Tax Returns. Seller or Petro GP has furnished to the Company true
-----------
and complete copies of (a) relevant portions of income tax audit reports,
statements of deficiencies, closing or other agreements received by the Group or
on behalf of the Group relating to Taxes, and (b) all relevant portions of
Returns for the Group for all periods ending on and after the Group's 1997
taxable year. Petro GP has never been a member of an affiliated group filing
consolidated returns other than a group of which Petro GP and Seller were the
only members. Neither Petro GP nor any member of the Group does business in or
derives income from any state, local,
9
<PAGE>
territorial or foreign taxing jurisdiction other than those for which all
Returns have been furnished to the Company.
2.7 Tax Deficiencies; Audits; Statutes of Limitations. The Returns of
-------------------------------------------------
the Group have never been audited by a government or taxing authority, nor, to
the knowledge of Seller, is any such audit in process, pending or threatened
(either in writing or, to the knowledge of Seller, verbally, formally or
informally). No deficiencies exist or have been asserted (either in writing or,
to the knowledge of Seller, verbally, formally or informally) or, to the
knowledge of Seller, are expected to be asserted with respect to Taxes of the
Group, and no member of the Group has received notice (either in writing or, to
the knowledge of Seller, verbally, formally or informally) or, to the knowledge
of Seller, expects to receive notice that it has not filed a Return or paid
Taxes required to be filed or paid by it. The Group is neither a party to any
action or proceeding for assessment or collection of Taxes, nor, to the
knowledge of Seller, has such event been asserted or threatened (either in
writing or, to the knowledge of Seller, verbally, formally or informally)
against the Group or any of its assets. No waiver or extension of any statute
of limitations is in effect with respect to Taxes or Returns of the Group. Each
of Seller General Partner and all other members of the Group has disclosed on
its federal income tax returns all positions taken therein that could give rise
to a substantial understatement penalty within the meaning of Code Section 6662.
2.8 Special Tax Status. Seller is not a "foreign person" (as that term
------------------
is defined in Section 1445 of the Code).
2.9 No Withholding. The transaction contemplated herein is not subject
--------------
to the tax withholding provisions of Code Section 3406, or of subchapter A of
Chapter 3 of the Code or of any other provision of law.
2.10 Tax Status of Seller LLC. From its formation, Seller LLC will be,
------------------------
and will continue to be, disregarded as an entity separate from its owner for
federal tax purposes pursuant to Treasury Regulation Section 301.7701-3.
2.11 Accredited Investor. Seller is an "institutional accredited
-------------------
investor" as such term is defined in Regulation D under the Securities Act.
2.12 Investment. Seller is acquiring the Seller Note 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, it being understood that the Seller Note may be transferred by
Seller to Seller's sole Stockholder ("Stockholder") and by Stockholder pro rata
-----------
to the eight (8) members of Stockholder (the "Members") upon Stockholder and the
Members affirming in writing to Holdings the representations and understandings
set forth in this Section 2.12 and in Section 2.13. All of Seller, Stockholder
and the Members are accredited investors within the meaning of Rule 501 under
the Securities Act. Seller understands that the Seller Note to be acquired in
exchange for the sale of the Seller Interests 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
10
<PAGE>
bona fide nature of the investment intent and the accuracy of Seller's
representations as expressed herein.
2.13 No Public Market. Seller understands that no public market now
----------------
exists for the Seller Note and acknowledges that the Seller Note must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. Seller 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 Seller Note. Seller understands
that any subsequent transfer of the Seller Note is subject to certain
restrictions and conditions set forth in the indenture relating to the Seller
Note and Seller agrees to be bound by, and not to resell, pledge or otherwise
transfer the Seller Note except in compliance with, such restrictions and
conditions. Seller agrees that if it should sell or otherwise transfer the
Seller Note prior to the date which is two years after the original issuance of
the Seller Note, Seller will do so only (a) to Holdings or any of its
subsidiaries, (b) inside the United States in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act), (c) inside the United States to an "accredited
investor" (as defined in Rule 501 under the Securities Act) that, in conjunction
with such transfer, furnishes (or has furnished on its behalf by a U.S. broker-
dealer) to the Trustee (as defined in the indenture relating to the Seller
Note), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Seller Note (the form of which
letter can be obtained from the Trustee), (d) outside the United States in
accordance with Regulation S under the Securities Act, (e) pursuant to the
exemption from registration provided by Rule 144 or another available exemption
under the Securities Act (if available) or (f) pursuant to an effective
registration statement under the Securities Act, and Seller further agrees to
provide to any person purchasing the Seller Note from Seller a notice advising
such purchaser that resales of the Seller Note are restricted as stated herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Volvo, and with respect to
Sections 3.1(b) and 3.4(b), to Mobil, as follows:
3.1 Organization and Authority; Validity.
------------------------------------
(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 and its subsidiaries are each duly qualified to transact business and
are each in good standing in each of the jurisdictions in which the ownership or
leasing of the properties used in its business or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not have a Material Adverse
Effect. The Company has all
11
<PAGE>
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted. The Company has the
requisite power and authority to enter into this Agreement, and, immediately
after the consummation of the Recapitalization, shall have the power and
authority to enter into the Volvo Operating Agreement and the Supplemental
Indenture, and to carry out its obligations hereunder and thereunder. Neither
the execution or delivery of this Agreement, and, immediately after the
consummation of the Recapitalization, neither the execution or delivery of the
Volvo Operating Agreement and the Supplemental Indenture nor the consummation of
the transactions provided for hereby or thereby, requires or will require any
further partnership action on the part of the Company. This Agreement has been,
and, immediately after the consummation of the Recapitalization, the Volvo
Operating Agreement and the Supplemental Indenture will have been, duly executed
by the Company and, assuming due execution by the other parties set forth on the
signature pages hereto and thereto, is and will be 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). The Company has delivered to Volvo complete
and correct copies of the Certificate of Limited Partnership and the Partnership
Agreement of the Company, in each case as amended and in effect on the date
hereof.
(b) Immediately after the consummation of the Recapitalization, the
Company will have the requisite power and authority to enter into the Mobil
Fueling Agreement and the Mobil Lube Agreement, and to carry out its obligations
thereunder. Neither the execution or delivery of the Mobil Fueling Agreement
nor the Mobil Lube Agreement immediately after the consummation of the
Recapitalization, nor the consummation of the transactions provided for thereby,
will require any further partnership action on the part of the Company.
Immediately after the consummation of the Recapitalization, the Mobil Fueling
Agreement and the Mobil Lube Agreement will have been duly executed by the
Company and, assuming due execution by the other parties set forth on the
signature pages thereto, will be 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).
3.2 Subsidiaries. Except as set forth on Exhibit 21 of the Company's
------------
Annual Report on Form 10-K for the year ended December 31, 1998, the Company has
no subsidiaries. All of the issued and outstanding shares of capital stock or
other equity interests in each subsidiary of the Company are validly issued,
fully paid and nonassessable and owned beneficially by the Company, free and
clear of any liens or other encumbrances, and there are no options, warrants or
other rights to acquire, or agreements or commitments pursuant to which any such
subsidiary is obligated to issue, sell, purchase or redeem shares of capital
stock or other equity interests in such subsidiary.
3.3 Capitalization. As of the date of this Agreement, (a) the general
--------------
partners and their respective general partner percentage interests held in the
Company are as set forth on Schedule
--------
12
<PAGE>
3.3, (b) the limited partners and their respective common limited partnership
- ---
and preferred partnership interests held in the Company are as set forth on
Schedule 3.3 and (c) there are no other partners of the Company other than as
set forth on Schedule 3.3. Except as contemplated by this Agreement or as set
forth on Schedule 3.3, there are no options, warrants or other rights to
acquire, or agreements or commitments pursuant to which the Company is obligated
to issue, sell, purchase or redeem percentage interests in the Company. All of
the percentage interests in the Company have been duly authorized and validly
issued, and are fully paid and nonassessable.
3.4 Conflicts; Defaults.
-------------------
(a) The execution or delivery by the Company of this Agreement, and,
immediately after the consummation of the Recapitalization, the execution or
delivery by the Company of the Volvo Operating Agreement and the Supplemental
Indenture and the consummation of the transactions contemplated hereby or
thereby, will not (i) conflict with, result in a breach of the provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in the
creation or imposition of any encumbrance upon any of the assets of the Company
or any of its subsidiaries, under the Company's Certificate of Limited
Partnership, the Partnership Agreement, the organizational documents of any
subsidiary of the Company, any other material agreement to which the Company or
any of its subsidiaries is a party or, to the Knowledge of the Company, any
material statute, other law or regulatory provision affecting any of them, or
(ii) require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of the Company or any of its subsidiaries, except for (a) the filing
of appropriate documents with the SEC under the Securities Act or the Exchange
Act and with the DOJ and the FTC, if any, (b) those matters set forth in
Schedule 3.4 hereto and (c) such conflicts, breaches, defaults, events,
- ------------
creations, impositions, approvals, consents, declarations, filings or
authorizations, which would not reasonably be expected to have a Material
Adverse Effect.
(b) The execution or delivery by the Company of the Mobil Fueling
Agreement and the Mobil Lube Agreement immediately after the consummation of the
Recapitalization, and the consummation of the transactions contemplated thereby,
will not (i) conflict with, result in a breach of the provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in the
creation or imposition of any encumbrance upon any of the assets of the Company
or any of its subsidiaries, under the Company's Certificate of Limited
Partnership, the Partnership Agreement, the organizational documents of any
subsidiary of the Company or, to the Knowledge of the Company, any other
material agreement to which the Company or any of its subsidiaries is a party or
any material statute, other law or regulatory provision affecting any of them,
or (ii) require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of the Company or any of its subsidiaries, except for (a) the filing
of appropriate documents with the SEC under the Securities Act or the Exchange
Act and with the DOJ and the FTC, if any, (b) those matters set forth in
13
<PAGE>
Schedule 3.4 hereto and (c) such conflicts, breaches, defaults, events,
- ------------
creations, impositions, approvals, consents, declarations, filings or
authorizations, which would not reasonably be expected to have a Material
Adverse Effect.
3.5 Litigation. Except as disclosed in Schedule 3.5 or in the SEC
----------
Documents, there are no actions, suits or proceedings or court orders or decrees
pending or, to the Knowledge of the Company, threatened, to which the Company is
a party or any of its properties is subject or by which it is bound before or by
any court or governmental agency, which if determined adversely to the interests
of the Company, would reasonably be expected to have a Material Adverse Effect.
3.6 Absence of Changes. Since March 31, 1999, there has not been any
------------------
material adverse change, or, to the Knowledge of the Company, any event or
development which, individually or together with such other events, could
reasonably be expected to result in a material adverse change, in the results of
operations or financial condition of the Company and its subsidiaries (taken as
a whole), except for (a) the execution and delivery of this Agreement and the
transactions to take place pursuant to this Agreement and (b) changes in the
economy in general or in the Company's industry in general and not specifically
relating to the Company.
3.7 No Undisclosed Liabilities. Except (a) as disclosed in the Company's
--------------------------
Annual Report on Form 10-K for the year ended December 31, 1998 and the
Company's Quarterly Report on Form 10-Q for the three-month period ended March
31, 1999 or in the notes thereto, (b) for the execution and delivery of this
Agreement and the transactions to take place pursuant to this Agreement and (c)
as set forth on Schedule 3.5, there are no liabilities against, relating to or
affecting the Company or any of its assets, whether known, unknown, fixed or
contingent, other than liabilities incurred in the ordinary course of business,
consistent with past practice, and such other liabilities which, in the
aggregate, would not have a Material Adverse Effect.
3.8 SEC Documents. The Company has previously delivered or made
-------------
available to Volvo complete and correct copies of all reports and statements
filed by the Company with the SEC under the Exchange Act since January 1, 1999
(the "SEC Documents"). As of their respective dates, none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
3.9 Environmental Matters. Except as set forth on Schedule 3.9:
--------------------- ------------
(a) The Company has obtained all licenses which are required in
respect of its business, operations, assets and properties under applicable
Environmental Laws (the "Environmental Permits"), except (i) those which the
failure to obtain would not have a Material Adverse Effect and (ii) for those
Environmental Permits which, if obtained, the payment of any required filing or
application fee or fines in connection therewith would not have a Material
Adverse Effect. To the Knowledge of the Company, the Company is in compliance
in all material respects with the terms and conditions of all such licenses and
with any applicable Environmental Law, except for such noncompliance which would
not have a Material Adverse Effect.
14
<PAGE>
(b) To the Knowledge of the Company, the operations of the Company and
the use and operations of the Real Property have been and are in compliance in
all material respects with all applicable Environmental Laws.
(c) To the Knowledge of the Company, except as permitted by the
Environmental Permits and in the ordinary course of business conducted in
compliance with applicable Environmental Laws (i) no Hazardous Materials are
located on the Real Property, or have been generated, treated, contained,
handled, located, used, manufactured, processed, buried, incinerated, deposited,
stored, or released on, under or about any part of the Real Property; and (ii)
the Real Property, and any improvements thereon, contain no asbestos, urea
formaldehyde, radon at levels above natural background, polychlorinated
biphenyls (PCBs) or pesticides.
(d) The Company has not received, nor, to the Knowledge of the
Company, is there proposed, threatened or anticipated with respect to the Real
Property, any notice, demand, request for information, complaint, summons,
investigation, order, agreement or litigation alleging in any manner that the
Company or its subsidiaries are responsible for any Release of Hazardous
Materials, or any costs arising under or in violation of any Environmental Laws.
To the Knowledge of the Company, there is no condition on the Real Property
which is in violation of any Environmental Laws or applicable governmental
requirements relating to Hazardous Materials.
(e) To the Knowledge of the Company, the Real Property is not and has
not been listed on the United States Environmental Protection Agency National
Priorities List of Superfund Sites, or any other list, schedule, law, inventory
or record of hazardous or solid waste sites maintained by any federal, state or
local agency, and the Company or its subsidiaries are not and have not been
designated as "potentially responsible parties" with respect to any such sites.
3.10 Financial Statements. The consolidated financial statements of the
--------------------
Company (including any related notes and schedules) included (or incorporated by
reference) (a) in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and (b) in its Quarterly Report on Form 10-Q for the three-
month period ended March 31, 1999 fairly present, in conformity with GAAP
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company as of the dates thereof and the consolidated results of
its operations and changes in its 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).
15
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS
-------------------------------------------------
As specifically set forth below, Volvo, Mobil or each of Volvo and Mobil,
as applicable, hereby represents and warrants, as to itself only, to (a), upon
its formation, Holdings, and (b) with respect to Section 4.4, the other
Subscriber, as follows:
4.1 Accredited Investor. Such Subscriber is an "accredited investor" as
-------------------
such term is defined in Regulation D under the Securities Act.
4.2 Investment.
----------
(a) Mobil is acquiring the Mobil Interests 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.
Mobil understands that the Mobil Interests to be acquired in exchange for its
investment in Holdings have 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
Mobil's representations as expressed herein. Mobil understands and acknowledges
that the Mobil Interests are subject to restrictions on transfer pursuant to the
terms of the Holdings Partnership Agreement.
(b) Volvo is acquiring the Volvo Limited Partner 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. Volvo understands that the Volvo Limited Partner Interest
to be acquired in exchange for its investment in Holdings 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 Volvo's representations as expressed herein. Volvo
understands and acknowledges that the Volvo Limited Partner Interest is subject
to restrictions on transfer pursuant to the terms of the Holdings Partnership
Agreement.
4.3 No Public Market.
----------------
(a) Mobil understands that no public market now exists for the Mobil
Interests and acknowledges that the Mobil Interests must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from such registration is available. Mobil 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 Mobil Interests.
16
<PAGE>
(b) Volvo understands that no public market now exists for the Volvo
Limited Partner Interest and acknowledges that the Volvo Limited Partner
Interest must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available.
Volvo 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
Volvo Limited Partner Interest.
4.4 Organization; Authority; Validity. Such Subscriber is a corporation
---------------------------------
or limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. Such Subscriber has the 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 action
on the part of such Subscriber. This Agreement has been duly executed by such
Subscriber and, assuming due execution by the other parties set forth on the
signature pages hereto, is a legal, valid and binding obligation of such
Subscriber, enforceable against such Subscriber 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).
4.5 Good Title. Mobil owns beneficially and of record the Mobil Limited
----------
Partner Interest, free and clear of all Liens. The transfer and delivery of the
Mobil Limited Partner Interest to Holdings as contemplated by this Agreement
will, upon consummation of the Closing, transfer good and marketable title
thereto to Holdings, free and clear of all Liens.
ARTICLE V
COVENANTS OF THE HOLDING PARTNERS, THE COMPANY, SELLER AND THE SUBSCRIBERS
--------------------------------------------------------------------------
The parties hereto agree that:
5.1 Reasonable Best Efforts. Each of the parties hereto shall, and the
-----------------------
Holding Partners shall cause Holdings to, use their reasonable best efforts to
satisfy the conditions to Closing set forth in Article VII, as applicable, of
this Agreement and to consummate the transactions contemplated by this Agreement
as promptly as is reasonably practical, and at the Closing shall execute and
deliver the documents referred to in Article VII.
-----------
5.2 Further Assurances. Consistent with the terms and conditions hereof,
------------------
each of the parties hereto shall, and the Holding Partners shall cause Holdings
to, as applicable, execute and deliver such instruments, certificates and other
documents and take such other action as any other party to this Agreement may
reasonably require in order to carry out this Agreement and the transactions
contemplated hereby.
17
<PAGE>
5.3 Access to Properties and Records. Between the date of this Agreement
--------------------------------
and the Closing Date, the Company shall afford to Volvo and its 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
written notice to the Company and shall cause the officers and employees of the
Company to furnish to Volvo and its authorized representatives any and all
financial, technical and operating data and other information pertaining to the
Company's business as Volvo shall from time to time reasonably request.
5.4 Formation of Holdings; Contribution by Holding Partners. In
-------------------------------------------------------
conjunction with the Closing, the Holding Partners shall form Holdings and (a)
Mobil and the Cardwell Partners shall contribute all or a portion of their
respective common limited partnership and preferred limited partnership
interests in the Company, as applicable, to Holdings in exchange for a common
limited partnership or Class A limited preferred partnership interest in
Holdings, as the case may be, (b) Mobil shall invest five million dollars
($5,000,000) in cash in exchange for the Mobil Class B Preferred Limited Partner
Interest; (c) Volvo shall invest thirty million dollars ($30,000,000) in cash in
exchange for the Volvo Limited Partner Interest; and (d) Warrant Holdings shall
invest nine million seven hundred thousand dollars ($9,700,000) in cash in
exchange for the Warrant Holdings Interest.
5.5 Discount Note Financing. In conjunction with the Closing and upon the
-----------------------
formation of Holdings, the Holding Partners shall cause Holdings to consummate
the Discount Note Financing.
5.6 Formation of Seller LLC; Merger of Petro GP into Seller LLC. In
-----------------------------------------------------------
conjunction with the Closing, Seller will form Seller LLC, and shall cause Petro
GP to merge with and into Seller LLC, with Seller LLC as the surviving entity.
5.7 Supplemental Indenture. The Company shall cause the Indenture to be
----------------------
amended in a manner consistent with Exhibit D hereto.
---------
5.8 Bank Financing. The Company shall obtain the Bank Financing
--------------
consistent with the terms and conditions as set forth in the commitment letter
on Exhibit H attached hereto.
---------
ARTICLE VI
TAX MATTERS
-----------
6.1 Tax Elections. Except as contemplated by this Agreement, no new
-------------
elections with respect to Taxes, or any changes in current elections with
respect to Taxes, affecting Seller General Partner or any of its assets shall be
made after the date of this Agreement without the prior written consent of
Holdings. Seller will cause Seller LLC, from formation, to be an entity
disregarded as separate from its owner for federal Tax purposes pursuant to
Treasury Regulation Section 301.7701-3, and Seller shall not make any election
to treat Seller LLC as other than as an
18
<PAGE>
entity disregarded as separate from its owner for federal Tax purposes pursuant
to Treasury Regulation Section 301.7701-3.
6.2 Preparation of Returns and Payment of Taxes. Seller and Seller
-------------------------------------------
General Partner shall prepare and timely file all Returns and amendments thereto
required to be filed by them and the Group for any taxable period that both
begins before and ends on or before the Closing Date. Holdings shall have a
reasonable opportunity to review all Returns and amendments thereto. Each of
Seller, Seller General Partner and each member of the Group shall pay and
discharge all Taxes, assessments and governmental charges upon or against it or
any of its properties or assets for such taxable period, before the same shall
become delinquent and before penalties accrue thereon.
6.3 Nonforeign Affidavit. Seller shall furnish Holdings with the
--------------------
affidavit referred to in Section 1445(b)(2) of the Code, stating, under penalty
of perjury, the Seller's United States taxpayer identification number and that
the Seller is not a foreign person.
6.4 Cooperation and Records Retention. Seller and Holdings shall each
---------------------------------
provide the other, and Holdings shall cause Seller General Partner after the
Closing Date to provide Seller, with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Return, audit
or other examination by any taxing authority or judicial or administrative
proceedings relating to liability for Taxes of or relating to Seller General
Partner. Seller shall provide Holdings, on or prior to the Closing Date, with a
copy of all of the Returns of, or relating to, the Seller General Partner, and
all records or other information (including, without limitation, all supporting
work schedules) which may be relevant to the Returns or Taxes of Petro GP or
Seller LLC and which are held by any member of the Group. Seller hereby
represents and warrants that all such Returns, records and other information
provided to Holdings will be all of the Returns, records and information of, or
relating to, the Seller General Partner held by any member of the Group and such
Returns, records and information will be accurate, full and complete.
6.5 Access to Records. Between the date of this Agreement and the
-----------------
Closing Date, Seller and Seller General Partner shall give Holdings and its
authorized representatives full access to all properties, books, records and
Returns of or relating to Seller General Partner, whether in possession of
Seller General Partner, Seller or third-party professional advisors or
representatives in order that Holdings may have full opportunity to make such
investigations as it shall desire to make of the affairs of Seller General
Partner. Seller and Seller General Partner shall ensure that all third-party
advisors and representatives of Seller and Seller General Partner, including
without limitation accountants and attorneys, fully cooperate and be reasonably
available to Holdings in connection with such investigation.
6.6 Closing Tax Return and Allocations. Seller General Partner's and
----------------------------------
Seller's distributive share of the Company's income, gain, loss, deduction and
distribution for the taxable year of the Company that includes the Closing Date
shall be determined on the basis of an interim closing of the books of the
Company as of the close of business on the Closing Date and shall not be based
upon a proration of such items for the entire taxable year. Tax distributions
19
<PAGE>
shall be made within 75 days of the Closing Date to all partners of the Company
with respect to taxable income allocated to such partners from the last Tax
distribution period of the Company through the Closing Date, based upon the
Company's good faith estimate of the amount of such payment, consistent with
past practices. The Company shall prepare for, and deliver to Seller, within
the time required by law, a federal Schedule K-1 (the "Closing K-1") and any
-----------
substantially similar state Return with respect to the Company for the period
which begins after the 1998 taxable year and includes the Closing Date (the
"Pre-Change Period"). In addition to those costs and expenses set forth in
-----------------
Section 10.1, Seller shall be solely responsible for all Return preparation or
Tax consulting fees (a) incurred by it after the Closing Date which relate to
the Seller Interests or (b) incurred by or billed to Holdings for the
preparation of any Return of Seller (not including the K-1 or similar forms or
schedules prepared by Holdings) or Tax consulting fees of Seller that occur
after the Closing Date.
6.7 Value of Assets of Holdings and the Company. Holdings shall
-------------------------------------------
prepare, or cause a third party to prepare, a schedule, which Seller shall have
the right to review and comment on (the "Allocation Schedule"), allocating the
-------------------
total payments made to Seller under this Agreement (including, for purposes of
this Section, any other consideration paid by the Company and any assumed
liabilities), among the assets of the Company in accordance with applicable law.
Holdings and Seller hereby agree to allocate the total amounts paid to Seller
under this Agreement (including assumed liabilities) for all Tax purposes in
accordance with the Allocation Schedule attached hereto. Holdings and Seller
shall file all Returns (including amended returns and claims for refund) in a
manner consistent with such allocation, and shall use their reasonable best
efforts to sustain such allocation in any subsequent tax audit or tax dispute.
6.8 Taxes Owed by Seller. Seller shall pay any Taxes incurred by Seller
--------------------
General Partner or Seller as a result of the transactions between Holdings and
Seller contemplated by this Agreement, and neither the Company, Holdings nor
Seller General Partner shall have any liability or obligation with respect
thereto. Any liability for such Taxes that may be imposed on the Company,
Holdings or Seller General Partner shall be indemnified by Seller pursuant to
and in accordance with Section 8.2(b).
6.9 Transfer Taxes. Notwithstanding anything to the contrary contained
--------------
in this Agreement, the Holdings Partners shall cause Holdings to pay all sales,
use, transfer and documentary Taxes and recording and filing fees incurred as a
result of the transactions between Holdings and Seller contemplated by this
Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
7.1 Conditions Precedent to the Obligations of the Subscribers.
----------------------------------------------------------
(a) Conditions to the Obligations of Volvo. The obligations of Volvo
--------------------------------------
under this Agreement shall be subject to the satisfaction of each of the
following conditions on or prior
20
<PAGE>
to the Closing Date (except such of the following conditions as shall have been
expressly waived in writing by Volvo):
(i) Volvo shall have received the written opinion of (A) Akin,
Gump, Strauss, Hauer & Feld, L.L.P., counsel to Seller, addressed to Volvo and
dated as of the Closing Date, substantially in the form of Exhibit A-1, (B)
-----------
Gibson, Dunn & Crutcher LLP, counsel to Holdings, addressed to Volvo,
substantially in the form of Exhibit B-1, (C) James Harrington Breed, Senior
-----------
Counsel to Mobil, addressed to Volvo and dated as of the Closing Date,
substantially in the form of Exhibit C-1; and (D) Kemp, Smith, Duncan & Hammond,
-----------
P.C., counsel to the Company, addressed to Volvo, substantially in the form of
Exhibit B-3;
- -----------
(ii) Holdings shall have delivered to Mobil, the Mobil Limited
Partner Interest, the Mobil Class A Preferred Limited Partner Interest and the
Mobil Class B Preferred Limited Partner Interest, and Mobil shall have paid to
Holdings $5,000,000 in cash by wire transfer of immediately available funds;
(iii) [intentionally omitted];
(iv) Holdings shall have delivered to Volvo the Volvo Limited
Partner Interest;
(v) The Volvo Operating Agreement shall have been executed and
delivered by each of the other parties thereto in substantially the form
attached hereto as Exhibit F;
---------
(vi) The representations and warranties of the Company
contained in Article III of this Agreement shall be true and correct as of the
date made and as of the Closing Date in all material respects as if made on and
as of the Closing Date. The Company shall have performed and complied in all
material respects with 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 Volvo shall have received from the Company a certificate dated the
Closing Date confirming the foregoing;
(vii) The representations and warranties of Seller contained in
Article II of this Agreement 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. Seller shall have performed and complied in all material respects
with 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 Volvo
shall have received from Seller a certificate dated the Closing Date confirming
the foregoing;
(viii) The representations and warranties of Mobil contained in
Section 4.4 of this Agreement 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. Mobil shall have performed and complied in all material respects
with 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 Volvo
shall have received from Mobil a certificate dated the Closing Date confirming
the foregoing;
21
<PAGE>
(ix) Holdings shall have delivered to Volvo a certificate in
the form of Exhibit I-1;
-----------
(x) Holdings shall have purchased the Seller Interests and the
Kirschner Interest pursuant to the Kirschner Purchase Agreement;
(b) Conditions to the Obligations of Mobil. The obligations of Mobil
--------------------------------------
under this Agreement shall be subject to the satisfaction of each of the
following conditions on or prior to the Closing Date (except such of the
following conditions as shall have been expressly waived in writing by Mobil):
(i) Mobil shall have received the written opinion of (A) Rogers
& Wells LLP, counsel to Volvo, addressed to Mobil and dated as of the Closing
Date, substantially in the form of Exhibit C-2 and (B) Gibson, Dunn & Crutcher
-----------
LLP, counsel to Holdings, addressed to Mobil, substantially in the form of
Exhibit B-1;
- -----------
(ii) Holdings shall have delivered to Volvo the Volvo Limited
Partner Interest and Volvo shall have paid to Holdings $30,000,000 in cash by
wire transfer of immediately available funds;
(iii) Holdings shall have delivered to Mobil the Mobil Limited
Partner Interest, the Mobil Class A Preferred Limited Partner Interest and the
Mobil Class B Preferred Limited Partner Interest;
(iv) The Mobil Fueling Agreement shall have been executed and
delivered by each of the other parties thereto in substantially the form
attached hereto as Exhibit J;
---------
(v) The Mobil Lube Agreement shall have been executed and
delivered by each of the other parties thereto in substantially the form
attached hereto as Exhibit K;
---------
(vi) The representations and warranties of the Company contained
in Sections 3.1(b) and 3.4(b) of this Agreement 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. The Company shall have performed and complied in all
material respects with 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 Mobil shall have received from the Company a certificate dated the
Closing Date confirming the foregoing;
(vii) The representations and warranties of Volvo contained in
Section 4.4 of this Agreement 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. Volvo shall have performed and complied in all material respects
with 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 Mobil
22
<PAGE>
shall have received from Volvo a certificate dated the Closing Date confirming
the foregoing; and
(viii) Holdings shall have purchased the Seller Interests and the
Kirschner Interest pursuant to the Kirschner Purchase Agreement.
7.2 Conditions Precedent to the Obligations of Seller. The
-------------------------------------------------
obligations of Seller under this Agreement shall be subject to the satisfaction
of each of the following conditions on or prior to the Closing Date (except such
of the following conditions as shall have been expressly waived in writing by
Seller):
(a) Obligations to Seller. Holdings shall have (i) purchased the
---------------------
Seller Interests, (ii) paid to Seller $55,000,000 in cash by wire transfer of
immediately available funds, (iii) issued the Seller Note to Seller (and/or cash
proceeds pursuant to Section 1.3(a)), (iv) executed the Registration Rights
Agreement by and among Holdings, Petro Holdings Financial Corporation, a
Delaware corporation, Seller and the other parties set forth on the signature
pages thereto, in substantially the form attached hereto as Exhibit N (the
---------
"Registration Rights Agreement"), and (v) delivered to Seller a certificate in
the form of Exhibit I-2;
-----------
(b) Changes in Tax Laws. From and after April 2, 1999, there shall
-------------------
have been no change in applicable federal income Tax laws, rules, regulations,
interpretations or rulings (i) that causes a material increase in the Taxes owed
by a stockholder of Seller after the Closing Date solely from such stockholder's
ownership of shares in Seller at any time during the Seller's taxable year that
includes the Closing Date or (ii) that materially affects the Seller's ability
to use its tax attributes for the Seller's taxable year that includes the
Closing Date. For purposes of this Section 7.2(b), any changes in Tax rates or
the alternative minimum tax rates shall not be considered a change.
(c) Opinions. Seller shall have received the written opinion of (i)
--------
Gibson, Dunn & Crutcher LLP, counsel to Holdings, addressed to Seller and dated
as of the Closing Date, substantially in the forms of Exhibit B-1 and B-2, and
----------- ---
(ii) James Harrington Breed, Senior Counsel to Mobil, addressed to Seller and
dated as of the Closing Date, substantially in the form of Exhibit C-1.
-----------
(d) Partnership Agreements. (i) The Fourth Amended and Restated
----------------------
Partnership Agreement in substantially the form attached hereto as Exhibit E-1
-----------
shall have been executed and delivered by the parties set forth on the signature
pages thereto, and (ii) the Holdings Partnership Agreement in substantially the
form attached hereto as Exhibit E-2 shall have been executed and delivered by
-----------
the parties set forth on the signature pages thereto;
7.3 Conditions Precedent to the Obligations of the Holding Partners.
---------------------------------------------------------------
The obligations of the Holding Partners to cause Holdings to perform its
obligations under this Agreement shall be subject to the satisfaction of the
following conditions on or prior to the Closing Date (except such conditions as
shall have been expressly waived in writing by the Holding Partners):
23
<PAGE>
(a) Opinions. Holdings shall have received the written opinion of (i)
--------
James Harrington Breed, Senior Counsel to Mobil, addressed to Holdings and dated
as of the Closing Date, substantially in the form of Exhibit C-1; (ii) Rogers &
-----------
Wells LLP, counsel to Volvo, addressed to Holdings and dated as of the Closing
Date, substantially in the form of Exhibit C-2; (iii) Akin, Gump, Strauss, Hauer
-----------
& Feld, L.L.P., counsel to Seller, addressed to Holdings and dated as of the
Closing Date, substantially in the form of Exhibit A-1; and (iv) Akin, Gump,
------------
Strauss, Hauer & Feld, L.L.P., tax counsel to Seller, addressed to Holdings and
dated as of the Closing Date, substantially in the form of Exhibit A-2;
-----------
(b) Mobil.
-----
(i) Mobil shall have paid to Holdings $5,000,000 in cash by wire
transfer of immediately available funds;
(ii) The representations and warranties of Mobil contained in
Article IV of this Agreement 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. Mobil shall have performed and complied in all material respects
with 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 Holdings
shall have received from Mobil a certificate dated the Closing Date confirming
the foregoing;
(c) Volvo.
-----
(i) Volvo shall have paid to Holdings $30,000,000 in cash by
wire transfer of immediately available funds;
(ii) The representations and warranties of Volvo contained in
Article IV of this Agreement 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. Volvo shall have performed and complied in all material respects
with 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 Holdings
shall have received from Volvo a certificate dated the Closing Date confirming
the foregoing;
(d) Seller.
------
(i) Seller shall have delivered to Holdings the Seller Interests
and shall have executed and delivered the Seller Limited Partner Interest
Assignment and Assumption Agreement and the Seller LLC Interest Assignment and
Assumption Agreement attached hereto as Exhibits G-2 and G-3, respectively; and
------------ ---
(ii) The representations and warranties of Seller contained in
Article II of this Agreement 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. Seller shall have performed and complied in all material respects
with all of the covenants, conditions and agreements required
24
<PAGE>
by this Agreement to be performed or complied with by it prior to or at the
Closing, and Holdings shall have received from Seller a certificate dated the
Closing Date confirming the foregoing.
7.4 Conditions Precedent to the Obligations of the Company. The
------------------------------------------------------
obligations of the Company under this Agreement shall be subject to the
satisfaction of the following condition on or prior to the Closing Date (except
such of the following conditions as shall have been expressly waived in writing
by the Company):
(a) Bank Financing. The Company shall have obtained the Bank
--------------
Financing consistent with the terms and conditions as set forth in the
commitment letter on Exhibit H attached hereto.
---------
(b) Opinions. The Company shall have received the written opinion of
--------
(i) James Harrington Breed, Senior Counsel to Mobil, addressed to the Company
and dated as of the Closing Date, substantially in the form of Exhibit C-1; and
-----------
(ii) Rogers & Wells LLP, counsel to Volvo, addressed to Holdings and dated as of
the Closing Date, substantially in the form of Exhibit C-2.
-----------
7.5 Conditions Precedent to the Obligations of All Parties. The
------------------------------------------------------
respective obligations of each party under this Agreement shall be subject to
the satisfaction of each of the following conditions on or prior to the Closing
Date (except such conditions as shall have been expressly waived in writing by
such party):
(a) Assignment and Assumption of Limited Partnership Interests. Each
----------------------------------------------------------
of the Cardwell Partners, Mobil and Holdings shall have executed and delivered a
Partnership Interest Assignment and Assumption Agreement attached hereto as
Exhibit G-1;
- -----------
(b) Merger of Petro GP into Seller LLC. Petro GP shall have merged
----------------------------------
with and into Seller LLC, with Seller LLC as the surviving entity;
(c) Supplemental Indenture. The Supplemental Indenture shall have
----------------------
been executed and delivered by the parties thereto in substantially the form
attached hereto as Exhibit D;
----------
(d) Partnership Agreements. (i) The Fourth Amended and Restated
----------------------
Partnership Agreement in substantially the form attached hereto as Exhibit E-1
-----------
shall have been executed and delivered by the parties set forth on the signature
pages thereto, and (ii) the Holdings Partnership Agreement in substantially the
form attached hereto as Exhibit E-2 shall have been executed and delivered by
-----------
the parties set forth on the signature pages thereto;
(e) Litigation. No Proceeding shall be pending, and none of the
----------
parties to this Agreement shall have received written notice of any threatened
Proceeding, that seeks to restrain, enjoin or prohibit or declare illegal, or
that seeks damages regarding any part of the Agreement or the transactions
contemplated hereby, including, without limitation, the Seller Interests, the
Mobil Interests or the Volvo Limited Partner Interest;
25
<PAGE>
(f) Consents. The parties shall have obtained all consents or
--------
approvals listed on Schedule 7.5 hereto necessary to consummate the transactions
------------
contemplated by this Agreement;
(g) Discount Note Financing. Holdings shall have consummated the
-----------------------
Discount Note Financing;
(h) Formation of Holdings; Contribution by Holding Partners. Holding
-------------------------------------------------------
Partners shall have formed Holdings and (i) the Cardwell Partners and Mobil
shall have contributed all or a portion of their respective common limited
partnership and preferred limited partnership interests in the Company, as
applicable, to Holdings in exchange for a common limited partnership or Class A
preferred limited partnership interest in Holdings, as the case may be, (ii)
Mobil shall have invested five million dollars ($5,000,000) in cash in exchange
for the Mobil Class B Preferred Limited Partner Interest and (iii) Volvo shall
have invested thirty million dollars ($30,000,000) in cash in exchange for the
Volvo Limited Partner Interest;
(i) Kirschner Purchase Agreement. The Kirschner Purchase Agreement in
----------------------------
substantially the form attached hereto as Exhibit L shall have been executed and
---------
delivered by Holdings and Kirschner;
(j) Payment of Insurance Premium. The Partners (other than Seller and
----------------------------
Seller General Partner, whose proportion of the premium shall be paid by the
Company) shall have paid in full the premium for the environmental insurance
policy described in Exhibit M (the "Partner Insurance Policy");
--------- ------------------------
(k) Good Standings Certificates.
---------------------------
(i) Volvo shall have delivered certificates issued by the
Secretary of State of the State of Delaware evidencing the good standing of
Volvo and Volvo Parent in the State of Delaware;
(ii) Mobil shall have delivered certificates issued by the
Secretary of State of the State of Delaware and New York, respectively,
evidencing the good standing of Mobil and Mobil Oil in the State of Delaware and
New York, respectively;
(iii) Seller shall have delivered certificates issued by the
Secretary of State of the State of Delaware evidencing the good standing of
Seller and Seller LLC in the State of Delaware;
(iv) The Company shall have delivered a certificate issued by
the Secretary of State of the State of Delaware evidencing the good standing of
the Company; and
(v) The Holding Partners shall cause Holdings to deliver a
certificate issued by the Secretary of State of the State of Delaware evidencing
the good standing of Holdings.
26
<PAGE>
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
-------------------------------
8.1 Survival of Representations and Warranties. Any claim made with
------------------------------------------
respect to the representations and warranties of the Company set forth in
Article III may be made until sixty (60) days after the completion of the audit
of the Company for the year ended December 31, 1999, except for the claims made
with respect to the representations and warranties set forth in Section 3.1,
which may be made at any time after the Closing. Any claim made with respect to
representations and warranties of the Subscribers set forth in Article IV, the
representations and warranties of Holdings in Exhibits I-1 and I-2 and the
------------ ---
representations and warranties of Seller set forth in Article II may be made at
any time after the Closing (other than claims made with respect to Sections 2.4
through 2.10, which may be made until the expiration of the applicable Tax
statute of limitations). All representations and warranties that survive the
Closing pursuant to this Section 8.1 shall survive as written, and are not
modified in any way by the fact that the conditions to closing in Article VII
set forth qualifications and modifications to such representations and
warranties that operate solely as conditions. The consummation of the
transactions contemplated herein at the Closing and the satisfaction of the
conditions to closing set forth in Article VII shall not be deemed a waiver of
any party's rights under this Article VIII with respect to any breach of any
such representation and warranty.
8.2 Indemnification by Seller.
-------------------------
(a) From and after the Closing Date, Seller agrees to indemnify,
defend and hold Holdings and Volvo harmless from and against any and all losses,
costs, liabilities, damages and expenses (including reasonable legal and other
expenses incident thereto, collectively, "Damages") resulting from Seller's
-------
nonperformance of any covenant, including, without limitation, those contained
in Article VI, or breach of any of its representations or warranties contained
in Article II of this Agreement; provided, however, that this Section 8.2(a)
-------- -------
does not relate to the breach of any representations and warranties or the
nonperformance of any covenants by Seller which relate to Taxes, which are the
subject of Section 8.2(b).
(b) Tax Indemnification by Seller. From and after the Closing Date,
-----------------------------
Seller shall indemnify, defend, and hold Holdings, Seller General Partner, and
the Company ("Tax Indemnitees") harmless from and against any and all Taxes that
Seller General Partner or Seller could be liable for (including, without
limitation, any obligation to contribute to the payment of any Taxes determined
on a consolidated, combined or unitary basis with respect to the Group),
excluding (i) any Taxes of the Company for which Seller General Partner is
liable solely as a result of its capacity as a general partner of the Company,
(ii) any Taxes for which Seller and Seller General Partner are jointly liable
for solely as a result of Seller General Partner's capacity as a general partner
of the Company, and (iii) any Taxes arising out of the treatment of a Tax item
by the Seller General Partner or Seller based upon information provided by the
Company, that are imposed on the Tax Indemnitees or the Tax Indemnitees' income,
business, property or
27
<PAGE>
operations, for which the Tax Indemnitees may otherwise be liable, or that
result in liens or encumbrances on any assets of the Tax Indemnitees:
(w) for any Tax period of Seller General Partner or Seller that
ends on or before the Closing Date;
(x) with respect to any Tax period of Seller General Partner or
Seller beginning before the Closing Date but ending after the Closing Date, the
portion of such Taxes that relates to the portion of the Tax period ending on
and including the Closing Date;
(y) resulting by reason of the several liability of Seller
General Partner pursuant to Treasury Regulations Section 1.1502-6 or by reason
of Seller General Partner having been a member of any consolidated, combined or
unitary group on or prior to the Closing Date; or
(z) resulting from Seller's nonperformance of any covenant or
breach of any of its representations or warranties in each instance relating to
Taxes set forth in this Agreement.
For the avoidance of doubt, Seller's liability under this Section 8.2(b) shall
extend to any losses or expenses of the Tax Indemnitees incurred in responding
to an examination, audit, administrative or court proceeding, or other procedure
in which a Tax authority seeks to propose an adjustment, that if pursued
successfully, would give rise to a liability for Taxes for which a Tax
Indemnitee would have a claim for indemnification under this Section 8.2(b),
even if no Tax is ultimately payable as a result of such examination, audit,
administrative or court proceeding, or other procedure. For purposes of this
Section 8.2(b), in the case of any Taxes that are imposed on a periodic basis
and are payable for a Tax period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Tax period
ending on the Closing Date shall (a) in the case of any Taxes, other than Taxes
based upon or related to income or receipts, be deemed to be the amount of such
Tax for the entire Tax period multiplied by a fraction the numerator of which is
the number of days in the Tax period ending on the Closing Date and the
denominator of which is the number of days in the entire Tax period, and (b) in
the case of any Tax based upon or related to income or receipts (including
franchise taxes to the extent based upon income, receipts or earned surplus) be
deemed equal to the amount which would be payable if the relevant Tax period
ended on the Closing Date for the Seller General Partner and the Group.
(c) Tax Benefits. If the amount with respect to which any claim is
------------
made under Section 8.2 gives rise to a currently realizable Tax Benefit to
Holdings or its partners (or any affiliated group member with which such partner
files a consolidated, combined or unitary Return), the indemnity payment
required to be made by Seller in respect of such claim shall be reduced by the
amount of the Tax Benefit available to Holdings or its partners (or any
affiliated group member with which such partner files a consolidated, combined
or unitary Return). To the extent such indemnity claim does not give rise to a
currently realizable Tax Benefit, if the amount with respect to which any
indemnity claim is made by Seller gives rise to a subsequently realized Tax
Benefit to Holdings or its partners (or any affiliated group member with which
such
28
<PAGE>
partner files a consolidated, combined or unitary Return), the party deriving
such Tax Benefit shall pay to Seller, when, as and if such Tax Benefit is
realized, the amount of such Tax Benefit to the extent that the Tax Benefit
would have resulted in a reduction of the amount paid by Seller under Section
8.2 if the Tax Benefit had been obtained in the year of such payment. For
purposes of this Section 8.2(c), a "Tax Benefit" means an amount by which the
Tax liability of the party (or any affiliated group with which such party files
a consolidated, combined or unitary Return) is reduced (including, without
limitation, by deduction, reduction of income by virtue of increased tax basis
or otherwise, entitlement to refund, credit or otherwise) plus any related
interest received from the relevant taxing authority. Where a party has other
losses, deduction, credits or items available to it, the Tax Benefit from any
losses, deductions, credits or items relating to the indemnity claim shall be
deemed to be realized only after the utilization of such other losses,
deductions, credits or items. For purposes of this Section 8.2(c), a Tax Benefit
will be considered to be realized or currently realizable for purposes of this
Section 8.2(c) at the time that it is reflected on a Return of the party
deriving such Tax Benefit. In the event that there should be a determination
disallowing the Tax Benefit, the Seller shall be liable to refund to the
indemnified party the amount of any related reduction previously allowed or
payments previously made to Seller under this Section 8.2(c). The amount of the
refunded reduction or payment shall be deemed a payment under paragraphs (a) or
(b) of this Section 8.2, as appropriate, and thus shall be paid subject to any
applicable reductions under this Section 8.2(c). In no event shall any
indemnified party under Section 8.2 be required to pay any amount to Seller
under this Section 8.2(c) if the aggregate amounts of all payments to Seller
under this Section 8.2(c) would exceed the amount of all payments made by the
Seller under Sections 8.2(a) and 8.2(b).
(d) Refunds. Holdings shall promptly pay to Seller any refund
-------
(including any interest paid with respect thereto) received by Holdings or the
Company (i) relating to Tax periods of the Seller General Partner ending on or
before the Closing, or (ii) attributable to any Tax paid by Seller under Section
8.2 hereof; provided, however, any refunds or credits of Taxes which are or
which result from a payment of any Taxes by Holdings or the Company, either
directly or indirectly, shall belong to Holdings or the Company. Any refunds or
credits of Taxes of Holdings or the Company relating to Tax periods beginning
after the Closing shall be for the account of Holdings or the Company.
8.3 Indemnification by Subscribers.
------------------------------
(a) Indemnification by Mobil.
------------------------
(i) Mobil agrees to indemnify, defend and hold Holdings
harmless, from and after the Closing Date, from and against any Damages
resulting from Mobil's nonperformance of any covenant or breach of any of its
representations or warranties contained in Article IV of this Agreement; and
(ii) Mobil agrees to indemnify, defend and hold the Company and
Volvo harmless, from and after the Closing Date, from and against any Damages
resulting from
29
<PAGE>
Mobil's nonperformance of any covenant or breach of any of its representations
or warranties contained in Section 4.4 of this Agreement.
(b) Indemnification by Volvo.
------------------------
(i) Volvo agrees to indemnify, defend and hold Holdings
harmless, from and after the Closing Date, from and against any Damages
resulting from Volvo's nonperformance of any covenant or breach of any of its
representations or warranties contained in Article IV of this Agreement; and
(ii) Volvo agrees to indemnify, defend and hold the Company and
Mobil harmless, from and after the Closing Date, from and against any Damages
resulting from Volvo's nonperformance of any covenant or breach of any of its
representations or warranties contained in Section 4.4 of this Agreement.
8.4 Indemnification by the Company. The Company agrees to indemnify,
------------------------------
defend and hold (a) Volvo harmless, from and after the Closing Date, from and
against any Damages resulting from the Company's nonperformance of any covenant
or breach of any of its representations or warranties contained in Article III
of this Agreement and (b) Mobil harmless, from and after the Closing Date, from
and against any Damages resulting from the Company's breach of any of its
representations or warranties contained in Sections 3.1(b) and 3.4(b) of this
Agreement.
8.5 Indemnification by Holdings. The Holding Partners shall cause
---------------------------
Holdings to indemnify, defend and hold Seller harmless, from and after the
Closing Date, from and against any Damages resulting from Holdings' or the
Holding Partners' nonperformance of any covenant or the breach of any of
Holdings' representations or warranties set forth on Exhibits I-1 and I-2.
------------ ---
8.6 Limitation. Each of the parties hereto acknowledges and agrees
----------
that after the Closing, each party's sole and exclusive remedy with respect to
any and all claims relating to the subject matter of this Agreement shall be
pursuant to (a) the indemnification provisions set forth in this Article VIII
and (b) Section 10.12.
8.7 Indemnity Procedure.
-------------------
(a) Notice of Claim. 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 8.7(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
30
<PAGE>
defend against, settle or satisfy any liability, damage, loss, claim or demand
for which Indemnitee is entitled to indemnification hereunder.
(b) Defense of Claim. 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 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; provided, however, that no claim giving rise to a Notice of Claim shall
-------- -------
be compromised or settled by Indemnitor except (i) with the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld or
(ii) where only the payment of money is involved in such settlement and
Indemnitee is fully released from such claim in connection with such settlement.
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; (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 8.7; and (iii) no claim giving rise to a Notice of Claim
shall be compromised or settled by Indemnitee except with the prior written
consent of the Indemnitor, which consent shall not be unreasonably withheld.
The term "Date of Notice of Claim" shall mean the date the Notice of Claim is
-----------------------
effective pursuant to Section 10.2 of this Agreement.
8.8 Agreement with Respect to Schedule 8.8 Items. With respect to any
--------------------------------------------
Damages determined and imposed within two (2) years after the Closing Date in
connection with any of the matters set forth on Schedule 8.8, the financial
------------
responsibility for such Damages shall be as follows:
(a) In the event that such Damages are less than or equal to $200,000
in the aggregate (after taking into account the recovery and receipt by the
Company of any insurance proceeds (other then the Partner Insurance Policy) or
the reimbursement of the Company by any state or other governmental
environmental reimbursement fund), the Company shall pay any and all such
Damages.
(b) In the event that such Damages are less than or equal to
$1,000,000 (after taking into account the recovery and receipt by the Company of
any insurance proceeds (other then the Partner Insurance Policy) or the
reimbursement of the Company by any state or other
31
<PAGE>
governmental environmental reimbursement fund), the Company shall pay any and
all such Damages up to an amount not in excess of $200,000, and the remaining
Damages shall be covered by the Partner Insurance Policy.
(c) In the event that such Damages are greater than $1,000,000 (after
taking into account the recovery and receipt by the Company of any insurance
proceeds (other then the Partner Insurance Policy) or the reimbursement of the
Company by any state or other governmental environmental reimbursement fund),
the Company shall pay the initial $200,000 of Damages, the next $800,000 of
Damages shall be covered by the Partner Insurance Policy, and all remaining
Damages in excess of $1,000,000 shall be paid by the Company.
ARTICLE IX
TERMINATION
-----------
9.1 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 Cardwell
Partners, the Subscribers and Seller;
(b) By Seller (if Seller is not then in breach of any term of this
Agreement), if any of the conditions set forth in Section 7.2 or 7.5 of this
Agreement shall have become incapable of fulfillment, and shall not have been
waived by Seller;
(c) By the Holding Partners (if neither the Holding Partners nor
Holdings is then in breach of any term of this Agreement), if the conditions set
forth in Section 7.3 or 7.5 of this Agreement shall have become incapable of
fulfillment, and shall not have been waived by Holdings;
(d) By the Company (if the Company is not then in breach of any term
of this Agreement), if the conditions set forth in Section 7.4 or 7.5 of this
Agreement shall have become incapable of fulfillment, and shall not have been
waived by the Company;
(e) By Volvo (if Volvo is not then in breach of any term of this
Agreement), if any of the conditions set forth in Section 7.1(a) or 7.5 of this
Agreement shall have become incapable of fulfillment, and shall not have been
waived by Volvo;
(f) By Mobil (if Mobil is not then in breach of any term of this
Agreement), if any of the conditions set forth in Section 7.1(b) or 7.5 of this
Agreement shall have become incapable of fulfillment, and shall not have been
waived by Mobil; or
(g) By any of the Company, the Holding Partners, the Subscribers or
Seller if the Closing shall not have occurred by July 31, 1999 (other than as a
result of a breach of this Agreement by the party seeking termination).
32
<PAGE>
9.2 Effect of Termination. If this Agreement is terminated and the
---------------------
transactions contemplated hereby are not consummated as provided in Section 9.1,
this Agreement shall become void and of no further force and effect, except for
(a) Sections 10.1, 10.14 and 10.15, each of which shall survive such termination
and (b) any liability for any breach of a representation, warranty, covenant or
agreement contained in this Agreement causing or permitting such termination.
ARTICLE X
MISCELLANEOUS
-------------
10.1 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, including, without
limitation, expenses of legal counsel, accountants, and other advisors incurred
at any time in connection with pursuing, negotiating or consummating the
proposed transactions contemplated by this Agreement; provided, however, that
-------- -------
in the event that the transactions contemplated by this Agreement are not
consummated for any reason (other than as a result of any breach of or default
under this Agreement by Seller), the Company shall promptly reimburse Seller for
its reasonable expenses incurred as described above.
10.2 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 as follows
(until notice of a change thereof is given as provided herein):
If to the Subscribers:
Mobil Long Haul, Inc.
3225 Gallows Road
Fairfax, Virginia 22037
Attention: Kevin T. Weir
Facsimile: (703) 846-5122
Telephone: (703) 846-5697
and
33
<PAGE>
Volvo Petro Holdings, LLC
c/o Volvo Trucks North America, Inc.
7900 National Service Road
P.O. Box 26115
Greensboro, North Carolina 27402-6115
Attention: Office of the General Counsel
Facsimile: (336) 393-2009
Telephone: (336) 393-2000
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York
Attention: David W. Bernstein
Facsimile: (212) 878-8375
Telephone: (212) 878-8342
If to Seller:
Petro Holdings LP Corp.
c/o Chartwell Investments Inc.
717 Fifth Avenue
New York, New York
Attention: Todd R. Berman
Facsimile: (212) 521-5533
Telephone: (212) 521-5500
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.
Facsimile: (202) 887-4288
Telephone: (202) 887-4092
34
<PAGE>
If to Holdings:
Petro Stopping Centers Holdings, L.P.
c/o Petro Stopping Centers, L.P.
6080 Surety Dr.
El Paso, Texas 79905
Attention: James A. Cardwell, Sr.
Nancy C. Santana
Facsimile: (915) 774-7373
Telephone: (915) 779-4711
If to the Company:
Petro Stopping Centers, L.P.
6080 Surety Dr.
El Paso, Texas 79905
Attention: James A. Cardwell, Sr.
Nancy C. Santana
Facsimile: (915) 774-7373
Telephone: (915) 779-4711
with a copy to:
Kemp, Smith, Duncan & Hammond
1900 Norwest Plaza
El Paso, Texas 79901
Attention: Jack T. Chapman
Facsimile: (915) 546-5360
Telephone: (915) 546-5218
Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, California 90071
Attention: Richard M. Russo
Facsimile: (303) 296-5310
Telephone: (303) 298-5715
10.3 Counterparts; Facsimile. This Agreement may be executed in two or more
-----------------------
counterparts and via facsimile, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
10.4 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
35
<PAGE>
statement of intent, in each case, written or oral, including, without
limitation, the letters of intention and other correspondence heretofore
exchanged between the parties.
10.5 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.
10.6 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, without
limitation, matters of validity, construction, effect and performance.
10.7 No Third Party Rights. Nothing herein express or implied is
---------------------
intended or shall be construed to confer upon or give any person or entity,
other than the parties hereto, any rights or remedies under or by reason of this
Agreement.
10.8 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.
10.9 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
attached hereto.
10.10 Further Assurances. Each party shall, at the request of any
------------------
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 carry out the provisions of and the
transactions contemplated by this Agreement.
10.11 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.
10.12 Specific Performance. Each of the parties hereto agrees that
--------------------
each of the other parties hereto shall be entitled, in addition to any other
remedies or damages available to any of
36
<PAGE>
them in the event of any breach of this Agreement, to specific performance of
the obligations of the other parties under this Agreement.
10.13 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.
10.14 Arbitration.
-----------
(a) Arbitrator. Any dispute or difference between or among the
----------
parties (such parties being referred to individually as a "Disputing Party,"
---------------
and, together, as the "Disputing Parties") arising out of this Agreement or the
-----------------
transactions contemplated hereby, including without limitation any dispute
between an Indemnitee and an Indemnitor under Article VIII, which the parties
are unable to resolve themselves shall be submitted to and resolved by
arbitration as herein provided. Any Disputing Party may request the American
Arbitration Association (the "AAA") to designate one arbitrator, who shall be
---
qualified as an arbitrator under the standards of the AAA, who shall be a
retired or former judge of any appellate or trial court of the State of New
York, any United States appellate court or the United States District Court for
any New York district, who is, in any such case, not affiliated with any party
in interest to such arbitration, and who has substantial professional experience
with regard to corporate legal matters.
(b) Location; Timing. The arbitrator shall consider the dispute at
----------------
issue in New York, New York, at a mutually agreed upon time within sixty (60)
days (or such longer period as may be acceptable to the Disputing Parties or as
directed by the arbitrator) of the designation of the arbitrator. The
arbitration proceeding shall be held in accordance with the rules for commercial
arbitration of the AAA in effect on the date of the initial request by the
Disputing Party, that gave rise to the dispute to be arbitrated (as such rules
are modified by the terms of this Agreement or may be further modified by mutual
agreement of the Disputing Parties) and shall include an opportunity for the
parties to conduct discovery in advance of the proceeding. Notwithstanding the
foregoing, the Disputing Parties shall agree that they will attempt, and they
intend that they and the arbitrator should use its best efforts in that attempt,
to conclude the arbitration proceeding and have a final decision from the
arbitrator within one hundred twenty (120) days from the date of selection of
the arbitrator; provided, however, that the arbitrator shall be entitled to
-------- -------
extend such one hundred twenty (120) day period for a total of two one hundred
twenty (120) day periods. The arbitrator shall deliver a written award with
respect to the dispute to each of the parties, who shall promptly act in
accordance therewith. Each Disputing Party to such arbitration agrees that any
award of the arbitrator shall be final, conclusive and binding and that they
will not contest any action by any other party thereto in accordance with an
award of the arbitrator. It is specifically understood and agreed that any
party may enforce any award rendered pursuant to the arbitration provisions of
this Section 10.14 by bringing suit in any court of competent jurisdiction.
37
<PAGE>
(c) Costs. All costs and expenses attributable to the arbitrator
-----
shall be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
10.15 Confidentiality. Any party receiving information (the "Receiving
--------------- ---------
Party") from another party hereto ("Disclosing Party") agrees to treat all
- ----- ----------------
information concerning the Disclosing Party furnished, or to be furnished, by or
on behalf of the Disclosing Party in accordance with the provisions of this
Section 10.15 (collectively, the "Information"), and to take, or abstain from
-----------
taking, other actions set forth herein. The Information will be used solely for
the purpose of evaluating the transactions contemplated hereby, and will be kept
confidential by the Receiving Party and its officers, directors, employees,
representatives, agents, and advisors; provided that (a) any of such Information
may be disclosed to the Receiving Party's officers, directors, employees,
representatives, agents, and advisors who need to know such Information for the
purpose of evaluating the transactions contemplated hereby, (b) any disclosure
of such Information may be made to which the Disclosing Party consents in
writing, and (c) such Information may be disclosed if so required by law. If
the transactions contemplated hereby are not consummated, the Receiving Party
will return to the Disclosing Party all material containing or reflecting the
information and will not retain any copies, extracts or other reproductions
thereof. Volvo acknowledges that it has entered into the Confidentiality
Agreements with the Company and Volvo acknowledges that any and all due
diligence conducted by Volvo shall be in accordance with and governed by the
terms thereof in addition to the terms of this Agreement.
10.16 Public Disclosure. No party hereto shall make public any release
-----------------
of information regarding the matters contemplated herein except (a) that each
party may continue such communications with employees, customers, suppliers,
franchisees, lenders, lessors, stockholders, and other particular groups as may
be legally required or necessary or appropriate and not inconsistent with the
best interests of the other party or the prompt consummation of the transactions
contemplated by this Agreement, (b) as required by law, or (c) pursuant to a
press release on mutually agreeable terms and timing. It is understood and
agreed that it is the intention of the parties to issue a press release mutually
agreeable to the parties regarding this Agreement immediately following the
execution hereof.
38
<PAGE>
IN WITNESS WHEREOF, this Partnership Interest Subscription and Purchase
Agreement has been signed on behalf of each of the parties hereto as of the date
first above written.
PETRO STOPPING CENTERS, L.P. MOBIL LONG HAUL, INC.
By: /s/ JAMES A. CARDWELL, SR. By: /s/ KEVIN T. WEIR
--------------------------- -------------------------
Name: James A. Cardwell, Sr. Name: Kevin T. Weir
Title: Executive Officer Title: President
PETRO HOLDINGS GP CORP. VOLVO PETRO HOLDINGS, LLC
By: Volvo Trucks North America, Inc.,
its Managing Member
By: /s/ MICHAEL S. SHEIN By: /s/ ROBERT GRUSSING, IV
--------------------------- -------------------------
Name: Michael S. Shein Name: Robert Grussing, IV
Title: Vice President Title: Executive Officer
PETRO HOLDINGS LP CORP. JAMES A. CARDWELL, SR.
By: /s/ MICHAEL S. SHEIN By: /s/ JAMES A. CARDWELL, SR.
--------------------------- ---------------------------
Name: Michael S. Shein James A. Cardwell, Sr.
Title: Vice President
PETRO WARRANT HOLDINGS CORPORATION JAMES A. CARDWELL, JR.
By: /s/ JAMES A. CARDWELL, SR. By: /s/ JAMES A. CARDWELL, JR.
--------------------------- ---------------------------
Name: James A. Cardwell, Sr. James A. Cardwell, Jr.
Title: President
JAJCO II, INC.
By: /s/ JAMES A. CARDWELL, JR.
---------------------------
Name: James A. Cardwell, Jr.
Title: President
S-1
<PAGE>
EXHIBIT A-1
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL TO SELLER
1. Seller is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware and Seller LLC is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
2. Seller has the power and authority to execute, deliver and perform all
of its obligations under the Agreement. The execution and delivery of the
Agreement, and the consummation by Seller of the transactions contemplated
thereby, have been duly authorized by all requisite corporate action on the part
of Seller. Assuming the due execution of the Agreement by each of the other
parties thereto, the Agreement is a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except (a) to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity), and (b) rights to indemnification and the limitations on
indemnification obligations under the Agreement may be subject to limitations of
public policy under federal and state securities laws.
A-1
<PAGE>
EXHIBIT A-2
-----------
ITEMS TO BE ADDRESSED IN TAX OPINION OF COUNSEL TO SELLER
Holdings' acquisition of the Seller LLC Interest shall be treated for
federal Tax purposes as the acquisition of the general partner percentage
interest in the Company held by Seller LLC.
A-2
<PAGE>
EXHIBIT B-1
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL
TO HOLDINGS DELIVERED TO MOBIL, VOLVO AND SELLER
1. Holdings is a limited partnership, duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2. Holdings has the power and authority to perform all of its obligations
under the Agreement. The consummation by Holdings of the transactions
contemplated by the Agreement has been duly authorized by all requisite
partnership action on the part of Holdings.
B-1
<PAGE>
EXHIBIT B-2
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL
TO HOLDINGS DELIVERED TO SELLER
1. Each of the Issuers has been duly organized or incorporated and is
validly existing as a limited partnership or corporation in good standing under
the laws of the State of Delaware, and is duly qualified to do business as a
foreign limited partnership or corporation and is in good standing under the
laws of the State of Texas;
2. Each of the Issuers has full power (partnership or corporate, as the
case may be) to own or lease its properties and conduct its business as it is
now being conducted;
3. The Seller Note has been duly and validly authorized, executed and
delivered and constitutes the legal, valid and binding obligations of the
Issuers, enforceable against the Issuers in accordance with its terms and is
entitled to the benefits of the indenture (the "Indenture") pursuant to which
the Seller Note and the Senior Discount Notes are being issued among the Issuers
and State Street Bank and Trust Company, as trustee;
4. The Indenture has been duly and validly authorized, executed and
delivered and constitutes a legal, valid and binding instrument enforceable
against the Issuers in accordance with its terms;
5. The Registration Rights Agreement by and among the Issuers and the
other parties thereto (the "Registration Rights Agreement") has been duly
authorized, executed and delivered by the Issuers and constitutes a legal, valid
and binding instrument enforceable against the Issuers in accordance with its
terms;
6. Neither (i) the issuance and sale of the Seller Note by the Issuers,
(ii) the consummation of the Recapitalization, (iii) the compliance by the
Issuers with the provisions of the Seller Note, the Indenture, the Registration
Rights Agreement or the officer's certificate delivered by Holdings
substantially in the form of Exhibit I-2 to the Subscription Agreement, nor (iv)
-----------
the fulfillment of the terms thereof will (A) conflict with, result in a breach
of the provisions of, or constitute a default under Holding's Certificate of
Limited Partnership, the Holdings Partnership Agreement, or any other indenture
or other agreement or instrument listed as a material contract on Schedule I
----------
hereto and to which Holdings, Financial or the Company is a party, or, to our
knowledge, any material statute, other law or regulatory provision affecting the
Issuers, or (B) require the approval, consent or authorization of, or the making
of any declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of the Issuers, except for (1) the filing of appropriate documents
with the SEC under the Securities Act or the Exchange Act and with the DOJ and
the FTC, if any, and (2) such conflicts, breaches, defaults, events, creations,
impositions, approvals, consents, declarations, filings or authorizations, which
would not have a material adverse effect on the Issuers.
B-2
<PAGE>
7. The consummation of the Recapitalization will not conflict with,
result in a breach of the provisions of, or constitute a default under the
Company's indenture dated as of February 1, 1997 relating to the Company's 10
1/2 Senior Notes due 2007, as amended by the Supplemental Indenture.
C-2
<PAGE>
EXHIBIT B-3
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL
TO THE COMPANY
B-3
<PAGE>
EXHIBIT C-1
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL
TO MOBIL
1. Mobil and Mobil Oil is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware and New York,
respectively.
2. Mobil has the power and authority to execute, deliver and perform all
of its obligations under the Agreement. The execution and delivery of the
Agreement, and the consummation by Mobil of the transactions contemplated
thereby, have been duly authorized by all requisite corporate action on the part
of Mobil. Assuming the due execution of the Agreement by each of the other
parties thereto, the Agreement is a valid and binding obligation of Mobil,
enforceable against Mobil in accordance with its terms, except (a) to the extent
that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity), and (b) rights to indemnification and the limitations on
indemnification obligations under the Agreement may be subject to limitations of
public policy under federal and state securities laws.
3. Mobil Oil has the power and authority to execute, deliver and perform
all of its obligations under each of the Mobil Fueling Agreement and the Mobil
Lube Agreement. The execution and delivery of each of the Mobil Fueling
Agreement and the Mobil Lube Agreement, and the consummation by Mobil Oil of the
transactions contemplated thereby, have been duly authorized by all requisite
corporate action on the part of Mobil Oil. Assuming the due execution of each
of the Mobil Fueling Agreement and the Mobil Lube Agreement by each of the other
parties thereto, each of the Mobil Fueling Agreement and the Mobil Lube
Agreement is a valid and binding obligation of Mobil Oil, enforceable against
Mobil Oil in accordance with its terms, except (a) to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity), and (b) rights to indemnification and the limitations on
indemnification obligations under each of the Mobil Fueling Agreement and the
Mobil Lube Agreement may be subject to limitations of public policy under
federal and state securities laws.
C-1
<PAGE>
EXHIBIT C-2
-----------
ITEMS TO BE ADDRESSED IN OPINION OF COUNSEL TO VOLVO
1. Volvo is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware. Volvo Parent is a limited
liability company, duly organized, validly existing and in good standing under
the laws of the State of Delaware.
2. Volvo has the power and authority to execute, deliver and perform all
of its obligations under the Agreement. The execution and delivery of the
Agreement and the consummation by Volvo of the transactions contemplated thereby
have been duly authorized by all requisite action on the part of Volvo.
Assuming the due execution of the Agreement by each of the other parties
thereto, the Agreement is a valid and binding obligation of Volvo, enforceable
against Volvo in accordance with its terms, except (a) to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity), and (b) rights to indemnification and the limitations on
indemnification obligations under the Agreement may be subject to limitations of
public policy under federal and state securities laws.
3. Volvo Parent has the power and authority to execute, deliver and
perform all of its obligations under the Volvo Operating Agreement. The
execution and delivery of the Volvo Operating Agreement and the consummation by
Volvo Parent of the transactions contemplated thereby have been duly authorized
by all requisite corporate action on the part of Volvo Parent. Assuming the due
execution of the Volvo Operating Agreement by each of the other parties thereto,
the Volvo Operating Agreement is a valid and binding obligation of Volvo Parent,
enforceable against Volvo Parent in accordance with its terms, except (a) to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity), and (b) rights to indemnification and the limitations on
indemnification obligations under the Volvo Operating Agreement may be subject
to limitations of public policy under federal and state securities laws.
C-2
<PAGE>
EXHIBIT D
---------
AMENDED BOND INDENTURE
D-1
<PAGE>
EXHIBIT E-1
-----------
FOURTH AMENDED AND RESTATED PARTNERSHIP AGREEMENT
E-1
<PAGE>
EXHIBIT E-2
-----------
HOLDINGS PARTNERSHIP AGREEMENT
E-2
<PAGE>
EXHIBIT F
---------
VOLVO JOINT OPERATING AND SUPPLY AGREEMENT
F-1
<PAGE>
EXHIBIT G-1
-----------
PARTNERSHIP INTEREST ASSIGNMENT AND ASSUMPTION AGREEMENT
G-1
<PAGE>
EXHIBIT 10.62
================================================================================
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY AND AMONG
PETRO, INC.
As General Partner
AND
PETRO STOPPING CENTERS
HOLDINGS, L.P.
PETRO HOLDINGS GP, L.L.C.
and
JAMES A. CARDWELL, JR.
As Limited Partners
July 23, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
DEFINITIONS.............................................................................................. 4
1.1 Definitions..................................................................................... 4
1.2 Interpretation.................................................................................. 12
ARTICLE II
GENERAL PROVISIONS
....................................................................................................... 12
2.1 Partnership Name............................................................................... 12
2.2 Purpose........................................................................................ 12
2.3 Principal Place of Business.................................................................... 12
2.4 Term........................................................................................... 12
2.5 Filings........................................................................................ 12
2.5.1 Status................................................................................ 12
2.5.2 Dissolution........................................................................... 13
2.6 Limited Partner Powers......................................................................... 13
2.7 Specific Authorization of Documents............................................................ 13
2.8 Admission...................................................................................... 13
ARTICLE III
CAPITALIZATION.......................................................................................... 13
3.1 .............................................................................................. 13
General........................................................................................ 13
3.2 Other Matters.................................................................................. 13
3.2.1 No Return of Capital.................................................................. 13
3.2.2 No General Partner Liability.......................................................... 14
3.2.3 No Limited Partner Liability.......................................................... 14
3.3 Priority of Expenditures....................................................................... 14
3.3.1 First Priority........................................................................ 14
3.3.2 Second Priority....................................................................... 14
3.3.3 Third Priority........................................................................ 14
3.3.4 Fourth Priority....................................................................... 14
3.3.5 Fifth Priority........................................................................ 14
ARTICLE IV
ALLOCATIONS............................................................................................. 14
4.1 Profits........................................................................................ 14
4.1.1 To Losses............................................................................. 14
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
4.1.2 To Sharing Percentages................................................................ 14
4.2 Losses......................................................................................... 14
4.2.1 To Sharing Percentages................................................................ 14
4.2.2 To Unrecovered Capital................................................................ 14
4.2.3 Residual.............................................................................. 14
4.2.4 Limit................................................................................. 15
4.3 Special Allocations............................................................................ 15
4.3.1 Minimum Gain Chargeback............................................................... 15
4.3.2 Partner Nonrecourse Debt Minimum Gain Chargeback...................................... 15
4.3.3 Qualified Income Offset............................................................... 15
4.3.4 Basis Adjustments..................................................................... 16
4.3.5 Nonrecourse Deductions................................................................ 16
4.3.6 Partner Nonrecourse Deductions........................................................ 16
4.3.7 Allocation of Self-Charged Interest................................................... 16
4.3.8 Sharing of Excess Nonrecourse Liabilities............................................. 16
4.4 Other Allocation Rules......................................................................... 17
4.4.1 Timing................................................................................ 17
4.4.2 Method................................................................................ 17
4.5 Tax Allocations: Code Section 704(c).......................................................... 17
4.5.1 Section 704 (c)....................................................................... 17
4.5.2 Election.............................................................................. 18
4.6 Tax Matters Partner............................................................................ 18
4.6.1 Appointment........................................................................... 18
4.6.2 Elections............................................................................. 18
4.6.3 Miscellaneous......................................................................... 18
4.6.4 Reimbursement......................................................................... 18
ARTICLE V
DISTRIBUTIONS........................................................................................... 19
5.1 Distributions.................................................................................. 19
5.1.1 Authority............................................................................. 19
5.1.2 Priority.............................................................................. 19
5.1.3 Cash or In Kind....................................................................... 19
5.3 Distribution to Limited Partners............................................................... 20
5.4 Limitation of Distributions.................................................................... 20
ARTICLE VI
MANAGEMENT.............................................................................................. 20
6.1 Board of Directors............................................................................. 20
6.1.1 Authority............................................................................. 20
6.1.2 Limitations on Authority.............................................................. 22
6.1.3 Duties and Obligations................................................................ 22
6.1.4 Composition........................................................................... 22
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.1.5 Term; Vacancies....................................................................... 22
6.1.6 Voting................................................................................ 23
6.2 Executive Committee............................................................................ 23
6.2.1 Authority............................................................................. 23
6.2.2 Composition........................................................................... 23
6.2.3 Voting................................................................................ 23
6.3 Officers....................................................................................... 24
6.3.1 Chairman.............................................................................. 24
6.3.2 Chief Executive Officer............................................................... 24
6.3.3 President............................................................................. 24
6.3.4 Chief Financial Officer............................................................... 24
6.3.5 Secretary............................................................................. 24
6.3.6 Limitation............................................................................ 24
6.3.7 Authority Generally................................................................... 25
6.5 Right to Rely on Chairman or Secretary......................................................... 25
6.6 Meetings and Approval Requirements of Board of Directors and Committees........................ 25
6.6.1 Regular Meetings...................................................................... 25
6.6.2 Special Meetings...................................................................... 25
6.6.3 Telephonic Meetings................................................................... 25
6.6.4 Notices............................................................................... 25
6.6.5 Quorum................................................................................ 26
6.6.6 Approval Requirements................................................................. 26
6.6.7 Written Consents...................................................................... 26
ARTICLE VII
INDEMNIFICATION......................................................................................... 26
7.1 General........................................................................................ 26
7.2 Indemnification Procedures..................................................................... 27
7.2.1 Notice................................................................................ 27
7.2.2 Reimbursement......................................................................... 27
7.2.3 Defense by Partnership................................................................ 27
7.2.4 Defense by Indemnified Person......................................................... 27
7.2.5 Fees and Expenses..................................................................... 28
7.2.6 Periodic Payments..................................................................... 28
7.2.7 Insurance............................................................................. 29
7.3 No Personal Liability for Indemnification...................................................... 29
ARTICLE VIII
AMENDMENTS.............................................................................................. 29
8.1 Amendments. ................................................................................... 29
ARTICLE IX
ADMISSIONS, EXITS AND TRANSFERS......................................................................... 30
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
9.1 Restriction on Transfers by Partners........................................................... 30
9.2 Change of Control Restriction.................................................................. 30
9.3 Rights of Unadmitted Assignees................................................................. 30
9.4 Distributions and Allocations in Respect to Transferred Interests.............................. 30
9.5 Termination of the Partnership................................................................. 31
ARTICLE X
DISSOLUTION AND WINDING UP.............................................................................. 31
10.1 No Termination................................................................................. 31
10.2 Events of Dissolution.......................................................................... 31
10.2.1 Expiration............................................................................ 31
10.2.2 Executive Committee................................................................... 31
10.2.3 Impossibility......................................................................... 31
10.2.4 General Partner Withdrawal............................................................ 31
10.2.5 Consent. ............................................................................. 31
10.2.6 Judicial Dissolution.................................................................. 32
10.3 Winding Up..................................................................................... 32
10.3.1 To Creditors.......................................................................... 32
10.3.2 To Partners........................................................................... 32
ARTICLE XI
MISCELLANEOUS........................................................................................... 32
11.1 Financial Reports.............................................................................. 32
11.2 Binding Effect................................................................................. 32
11.3 Severability................................................................................... 32
11.4 Governing Law.................................................................................. 33
11.5 Not for Benefit of Creditors................................................................... 33
11.6 Counterpart Execution.......................................................................... 33
11.7 Sole and Absolute Discretion................................................................... 33
11.8 Certificates................................................................................... 33
11.9 Securities..................................................................................... 33
</TABLE>
iv
<PAGE>
SCHEDULES
Schedule A - Capital Contributions and Sharing Percentages of the
Partners
Schedule 2.6 - Affiliated Agreements
Exhibit 4.5.1 - Section 704(c) Allocation Methods
i
<PAGE>
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
------------------------------
THIS FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT is entered
into as of the 23rd day of July 1999 among Petro, Inc., a Texas corporation
("Petro") as General Partner and Petro Stopping Centers Holdings, L.P., a
Delaware limited partnership ("Petro Holdings"), Petro Holdings GP, L.L.C., a
Delaware limited liability company ("Holdings GP, L.L.C."), and James A.
Cardwell, Jr. ("Cardwell Jr."), 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, Inc., a Delaware corporation
("Roadside") and Petro, Inc., a Texas corporation ("Petro") as general partners,
and James A. Cardwell, Jr., ("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 Investors, Inc., a Nevada corporation ("Fremont"), James
A. Cardwell, Sr., ("Cardwell Sr."), Cardwell, Jr. and JAJCO II, Inc., a Delaware
corporation ("JAJCO II," together the "Cardwell Partners"), 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, JAJCO, Inc.,
an Ohio corporation, and Arcadian Management Corporation, a Colorado
corporation. 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, transferred a 0.08% 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 Ventures, Inc., a
1
<PAGE>
Delaware corporation ("Sequoia"), the remaining 44.17% percentage interest in
the Partnership as a limited partner interest in the Partnership. Subsequent to
the 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, by and among Petro Holdings GP Corp., a Delaware
corporation ("Holdings GP"), Petro Holdings LP Corp, a Delaware corporation
("Holdings LP, together with Holdings GP, the "Chartwell Partners"), Mobil Long
Haul Inc., a Delaware corporation ("Mobil"), Roadside, Sequoia and the
Partnership (the "Interest Purchase Agreement"), Roadside sold its general
partner interest in the Partnership to Holdings GP, and Sequoia sold its limited
partner interests in the Partnership to Mobil and to Holdings LP.
D. Pursuant to that certain Partnership Interest Subscription and
Purchase Agreement dated as of July 23, 1999, among the Partnership, Petro, the
Chartwell Partners, Mobil, the Cardwell Partners, Volvo Petro Holdings, L.L.C. a
Delaware limited liability company ("Volvo"), and Petro Warrant Holdings
Corporation, a Delaware corporation ("Warrant Holdings") and to that certain
Purchase Agreement dated July 19, 1999, among the Petro Holdings, Warrant
Holdings, Petro Holdings Financial Corporation, a Delaware corporation, First
Union Capital Markets Corp. and CIBC World Markets Corp., and to certain other
related agreements and transactions:
(1) Petro exchanged a portion of its general partnership interest in
the Partnership for an additional limited partnership interest in
the Partnership and retained a one-quarter of one percent (0.25%)
general partnership interest in the Partnership;
(2) Immediately thereafter, certain of the partners in the
Partnership exchanged their partnership interests in the
Partnership for partnership interests in Petro Holdings as
follows:
(a) Petro exchanged a portion of its common limited partnership
interest in the Partnership for a general partnership
interest in Petro Holdings;
(b) Cardwell Jr. exchanged a portion of his common limited
partnership in the Partnership for a common limited
partnership interest in Petro Holdings and retained a one-
quarter of one percent (0.25%) common limited partnership
interest in the Partnership;
(c) Cardwell Sr., JAJCO and Mobil exchanged all of their common
limited partnership interests in the Partnership for common
limited partnership interests in Petro Holdings, and Petro
exchanged its remaining common limited partnership interests
in the Partnership for common limited partnership interests
in Petro Holdings;
2
<PAGE>
(d) The Cardwell Partners and Mobil exchanged their preferred
limited partnership interests in the Partnership for
preferred limited partnership interests (designated "Class A
Preferred Partnership Interests") in Petro Holdings;
(3) Immediately following the above-described transactions:
(a) Mobil made a cash investment in Petro Holdings in exchange
for a convertible preferred limited partnership interest
(designated "Class B Preferred Partnership Interest") in
Petro Holdings;
(b) Volvo made a cash investment in Petro Holdings in exchange
for a common limited partnership interest in Petro Holdings;
(c) Warrant Holdings sold certain Warrants (the "Warrants") to
Petro Holdings and used the proceeds of such sale to
purchase a ten percent (10%) common limited partnership
interest in Petro Holdings;
(d) Petro Holdings issued 15% Senior Discount Notes due 2008
(the "Senior Discount Notes") along with the Warrants
purchased from Warrant Holdings; and
(e) Petro Holdings (using the proceeds of the Volvo and Mobil
cash investments in Petro Holdings and of the sale of the
Senior Discount Notes and Warrants) purchased (i) the common
limited partnership interests in the Partnership owned by
Holdings LP and by Kirschner and (ii) all of the membership
interests in Petro Holdings GP, L.L.C. ("Holdings GP,
L.L.C.") a Delaware limited liability company organized by
Holdings LP and the surviving entity in a merger with
Holdings GP, whereupon the general partnership interest
owned by Holdings GP, L.L.C. was immediately converted into
a limited partnership interest in the Partnership.
E. Petro, as the general partner of the Partnership, and Petro Holdings,
Holdings GP, L.L.C., and Cardwell Jr., as limited partners of the Partnership,
desire to amend and restate the Third Amended Agreement in its entirety to
reflect the foregoing transactions, and specifically: (i) the transfer by Petro
of a general partnership interest in the Partnership in exchange for an
additional common limited partnership interest in the Partnership, while
retaining a one-half of one percent (0.5%) general partnership interest in the
Partnership; (ii) the transfer by Cardwell Jr. of a portion of his common
limited partnership interest in the Partnership to Petro Holdings, while
retaining a one-half of one percent (0.5%) common limited partnership interest
in the Partnership; (iii) the transfer by Petro, Cardwell Sr., JAJCO, and Mobil
of their common limited partnership interests to Petro Holdings; (iv) the
transfer by the Cardwell Partners and Mobil of their preferred limited
3
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partnership interests in the Partnership to Petro Holdings; (v) the purchase by
Petro Holdings of the membership interests in Holdings GP, L.L.C. and the
conversion of the general partnership interest held by Holdings GP, L.L.C. (as
the successor in interest to Holdings GP) to a common limited partnership
interest; (vi) the continuation of the business of the Partnership; (vii) the
Sharing Percentages of the Partners as a result of events described herein; and
(viii) 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 Third Amended Agreement and agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. In addition to the terms defined elsewhere in this
-----------
Agreement, the following terms used in this Agreement shall have the following
meanings:
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 "Affiliate" means, when used with reference to a specified
---------
Person,
4
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(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 or manager 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, manager, 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.
(c) For the purposes of the definition of "Affiliate," the
term "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.
1.1.5 "Agreement" or "Partnership Agreement" means this Limited
------------------------------------
Partnership Agreement as it may be amended from time to time.
1.1.6 "Amended and Restated Credit Agreement" means the Amended
-------------------------------------
and Restated Credit Agreement dated as of July 23, 1999, among the Partnership,
Petro Holdings, BankBoston, N.A., as agent and a lender, and the lenders
signatory thereto.
1.1.7 "Applicable Tax Rate" means a tax rate used for computing
-------------------
Minimum Tax Distributions consisting of the sum of (i) either the individual or
corporate maximum marginal income tax rate for federal income tax purposes based
on whether the Partner for which a Minimum Tax Distribution is being computed is
for federal income tax purposes (x) a corporation (other than an S corporation
under Section 1361 of the Code), in which case the maximum corporate federal tax
rate applies, (y) an individual, in which case the maximum individual federal
tax rate applies, or (z) a flow-through or disregarded entity, in which case the
maximum federal tax rate which applies shall be determined by the federal income
tax characterization of the taxpayer to which the flow-through tax attributes
are ultimately allocated, plus (ii) a reasonable overall state and local income
tax rate established from time to time by the Executive Committee.
1.1.8 "Article" means an Article of this Agreement.
-------
1.1.9 "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
5
<PAGE>
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; Minimum Tax
Distributions; the payment of Partnership and Petro Holdings debt 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.
1.1.10 "Board of Directors" has the meaning set forth in Section
------------------
6.1.
1.1.11 "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.
1.1.12 "Book Value" shall mean the Gross Asset Value computed
----------
for purposes of maintaining Capital Accounts hereunder. References to "Book
Purposes" shall be similarly interpreted.
1.1.13 "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.
1.1.14 "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 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, or as to which such Partner is otherwise subjected to personal
liability;
(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, 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 a Partnership
Interest is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of
6
<PAGE>
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 shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) Upon the occurrence of any event which causes the
termination and dissolution of the Partnership, all Profits and Losses shall be
computed and allocated to the Capital Accounts of the Partners as of such date
of termination.
The Capital Accounts of the Partners as of the Effective Date are set forth
on Schedule A. 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 that the
Executive Committee determines (after consulting with, and upon the advice of,
the independent auditors then employed by the Partnership) 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 such modification 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.
1.1.15 "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 deemed contributed to the Partnership
with respect to the interest in the Partnership held by such Partner pursuant to
Article III. The Capital Contributions of the Partners as of the Effective Date
are set forth on Schedule A hereto.
1.1.16 "Capital Partners" shall mean all Partners that have
----------------
contributed capital to the Partnership.
1.1.17 "Code" means the United States Internal Revenue Code of 1986,
----
as amended from time to time (or any corresponding provisions of succeeding
law).
1.1.18 "Cumulative Minimum Tax Distributions" means the total Minimum
------------------------------------
Tax Distributions made to a Partner since the Effective Date and shall exclude
the Minimum Tax Distribution for the current period which is being calculated to
be distributed pursuant to Section 5.2, hereof.
7
<PAGE>
1.1.19 "Current 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 were
applied to the sum of, (i) Profits (excluding the adjustments set forth in
subparagraphs (a) through (f) of Section 1.1.48) and (ii) Section 704(c)
Allocations allocated to a Partner for the Fiscal Year, or part thereof, for
which Current U.S. Taxes Due are being computed hereunder; provided however, in
the case of a Partner which, for federal tax purposes, is a corporation (other
than an S corporation under Section 1361 of the Code) or which is a flow-through
or disregarded entity in which the flow-through tax attributes are ultimately
allocated to a corporation (other than an S corporation under Section 1361 of
the Code), "Current U.S. Taxes Due" shall have the same meaning as "U.S. Taxes
Due."
1.1.20 "Effective Date" means July 24, 1999.
--------------
1.1.21 "Executive Committee" has the meaning set forth in Section 6.2.
-------------------
1.1.22 "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 of national reputation 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.
1.1.23 "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, (ii) any subsequent twelve (12) month period commencing on the next day
following the last day of the previous Fiscal Year and ending on the Friday
closest to December 31 of the same calendar year.
1.1.24 "GAAP" means generally accepted accounting principles and
----
practices in effect in the United States of America from time to time.
1.1.25 "General Partner" means Petro, Inc. and Holdings GP, L.L.C.
---------------
("Holdings GP")], 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.
1.1.26 "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 shall
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-
1(b)(2)(ii); (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); and (iv) the Gross Asset Value of an item of Partnership
property shall be adjusted to its Fair Market Value whenever it is distributed
to a Partner, as permitted under Regulation Section 1.704-1(b)(2)(ii). Gross
Asset Value shall be adjusted by Book
8
<PAGE>
Depreciation taken into account with respect to such asset for purposes of
computing Profits or Losses, and other items allocated pursuant to Section 4.3.
1.1.27 "Gross Income" means the total revenues of the Partnership
------------
computed in accordance with the principles of Section 61 of the Code, and which
shall be determined on a consolidated basis with the Partnership's subsidiaries.
1.1.28 "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).
1.1.29 "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, (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); and
(iv) any liability for alternative minimum tax under Section 55 of the Code.
1.1.30 "Indemnified Person" means those Persons identified in either
------------------
Section 7.1 or Section 7.2 as being entitled to receive the benefit of the
indemnity provided therein, and shall include 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.
1.1.31 "Indemnifying Party" means the Partnership.
------------------
1.1.32 "Limited Partner" means Petro Holdings and any other Person who
---------------
becomes a Limited Partner pursuant to the terms of this Agreement.
1.1.33 "Minimum Tax Distribution" means the distribution provided for
------------------------
in Section 5.2.
1.1.34 "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.
1.1.35 "Net Profits Allocation" shall mean an allocation of Profits
----------------------
that causes, for any applicable period after the Effective Date, the cumulative
amount of Profits allocated to such Partner to exceed the cumulative amount of
Losses allocated to such Partner. For this purpose,
9
<PAGE>
Profits and Losses shall be computed without the adjustments set forth in
subparagraphs (a) through (f) of Section 1.1.48 relative to the distribution of
"Profits and Losses" and include all Section 704 (c) Allocations reportable by a
Partner for federal income tax purposes.
1.1.36 "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).
1.1.37 "Nonrecourse Liability" has the meaning set forth in
---------------------
Regulations Section 1.752-1(a)(2).
1.1.38 "Partner Nonrecourse Debt" has the meaning set forth in
------------------------
Regulations Section 1.704-2(b)(4).
1.1.39 "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).
1.1.40 "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).
1.1.41 "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.
1.1.42 "Partnership" means Petro Stopping Centers, L.P., a Delaware
-----------
limited partnership.
1.1.43 "Partnership Interest" shall mean the partnership interests in
--------------------
the Partnership owned by the General and Limited Partners.
1.1.44 "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).
1.1.45 "Person" means (i) any individual, (ii) any domestic
------
partnership, corporation, limited liability company, association, business, or
trust, (iii) any government or political subdivision thereof, or (iv) any
governmental agency or other entity. For purposes of this definition, "domestic"
shall mean an entity created or organized in the United States or under the law
of the United States or of any State as defined in Code Section 7701(a)(4).
1.1.46 "Petro Holdings Minimum Tax Distribution" shall mean, the
---------------------------------------
Minimum Tax Distribution to be made to Petro Holdings in accordance with Section
5.2(a) of this Agreement.
1.1.47 "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
10
<PAGE>
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;
(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 shall be taken into account in
computing Profits or Losses.
1.1.48 "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).
1.1.49 "Section" means a Section of this Agreement.
-------
1.1.50 "Sharing Percentage" shall mean the Sharing Percentage
------------------
listed on Schedule A.
1.1.51 "Unrecovered Capital" shall mean: with respect to any
-------------------
Partnership Interest, an amount equal to (X) the amount of Capital Contributions
plus Profits allocations in Section 4.1 in respect of such Partnership Interest
less (Y) the sum of (i) the aggregate amount of Losses allocated to such
Partnership Interest under Section 4.2 and (ii) distributions to such Partner in
respect of such Partnership Interest pursuant to Section 5.1.2. A Partner's
Unrecovered Capital with respect to its Partnership Interest shall reflect any
changes in the Gross Asset Values of Partnership property which occur in
accordance with the provisions of Section 1.1.26 relating to the definition
11
<PAGE>
of "Gross Asset Value," and any changes in Gross Asset Value of Partnership
property shall be allocated among Partners in accordance with their respective
Sharing Percentages in effect immediately prior to the event or circumstance
which gives rise to an adjustment of Gross Asset Value in accordance with
Section 1.1.26.
1.1.52 "U.S. Taxes Due" means with respect to any Fiscal Year
--------------
or part thereof of the Partnership after the Effective Date, the estimated
Income Tax which each Partner would be required to pay if the Applicable Tax
Rate (being utilized for such Fiscal Year) were applied to the Net Profits
Allocations allocated to such Partner as of the date through which U.S. Taxes
Due are being computed hereunder; and in the event a Partner is a corporation
(other than an S corporation under Section 1361 of the Code) and has no U.S.
Taxes Due pursuant to the preceding definition for the applicable period, but is
otherwise subject to alternative minimum tax under Section 55 of the Code as to
Net Profits Allocations (as adjusted for alternative minimum tax purposes)
through such date, "U.S. Taxes Due" shall mean the amount of the resulting
alternative minimum tax under Section 55 of the Code for the applicable period
as to such Net Profits Allocations.
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 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 is (i) to operate,
-------
manage, develop, franchise and/or own 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, (ii) 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, (iii) to engage
in financing transactions and any and all lawful business related to the
ownership and operation of truck stopping centers, and (iv) to transact any and
all lawful business for which limited partnerships may be organized incident to
the Act that is incident, necessary, and appropriate to the foregoing.
2.3 Principal Place of Business. The Partnership's principal
---------------------------
place of business shall be 6080 Surety Drive, El Paso, Texas 79905. The
Partnership's principal place of business may
12
<PAGE>
be changed from time to time, and other offices may be established from time to
time, by the Board of Directors.
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, 2025, 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. The
General Partner shall execute and file such certificates, notices, statements
and other instruments and amendments thereto, and take any and all such other
actions, as the Board of Directors may direct in connection with perfecting and
maintaining the status of the Partnership in accordance with this Section 2.5.1.
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. The General Partners shall execute and file such
certificates of cancellation as the Board of Directors may direct in connection
with actions contemplated by this Section 2.5.2
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 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.
13
<PAGE>
2.7 Specific Authorization of Documents. The Partnership may enter
-----------------------------------
into and perform the agreements listed on Schedule 2.6 hereto without further
act, vote or approval of any Partner or of the Partnership.
2.8 Admission. Petro Holdings is hereby admitted to the Partnership
---------
as a Limited Partner of the Partnership, and Petro shall continue as the General
Partner of the Partnership.
ARTICLE III
CAPITALIZATION
--------------
3.1 General. Schedule A attached hereto describes the 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.
3.2 Other Matters.
-------------
3.2.1 No Return of Capital. Except as provided in Section 5.4,
--------------------
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.
3.3 Priority of Expenditures. Expenditures of the Partnership shall
------------------------
be paid in the following order of priority:
3.3.1 First Priority. To pay all operating expenses and capital
--------------
expenditures other than expenditures for new truck stop locations and for
acquisitions of existing facilities from third parties ("Expansion Capital
Expenditures");
3.3.2 Second Priority. To pay the Partnership's debt service;
---------------
3.3.3 Third Priority. To make Minimum Tax Distributions to
--------------
Partners;
3.3.4 Fourth Priority. To make Expansion Capital Expenditures;
---------------
and
3.3.5 Fifth Priority. To make any other distributions to the
--------------
Partners.
ARTICLE IV
ALLOCATIONS
-----------
14
<PAGE>
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 Sharing Percentages. Thereafter, to the Partners in
----------------------
proportion to their Sharing Percentages.
4.2 Losses. Losses for any Fiscal Year shall be allocated:
------
4.2.1 To Sharing Percentages. First, among the Partners in
----------------------
accordance with their Sharing Percentages, until the cumulative amount of Losses
allocated pursuant to this Section 4.3.1 is equal to the cumulative amount of
Profits allocated pursuant to Section 4.1.2;
4.2.2 To Unrecovered Capital. Next, among the Partners in
----------------------
accordance with their Sharing Percentages, to the extent of their Unrecovered
Capital; and
4.2.3 Residual. Thereafter, among the Partners in accordance
--------
with Sharing Percentages; and
4.2.4 Limit. The Losses allocated pursuant to this Section 4.3
-----
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 4.2.4 shall be allocated to the General Partners in proportion
to their 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 IV, 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 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.
15
<PAGE>
4.3.2 Partner Nonrecourse Debt Minimum Gain Chargeback.
------------------------------------------------
Notwithstanding anything to the contrary in this Article IV (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 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 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
16
<PAGE>
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.
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 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 in accordance with their respective Sharing
Percentages.
4.3.9 Curative Allocations. The allocations set forth in
--------------------
Sections 4.4.1 through 4.4.3 (the "Regulatory Allocations") are intended to
comply with certain requirements of the Treasury Regulations. It is the intent
of the Partners that, to the extent possible, all Regulatory Allocations shall
be offset either with other Regulatory Allocations or with special allocations
or other items of Partnership income, gain, loss or deduction pursuant to this
Section 4.3.9. Therefore, notwithstanding any other provisions of this Article
IV (other than the Regulatory Allocations), the Partnership shall make such
offsetting special allocations of Partnership income, gain, loss or deduction in
whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal of the Capital Account balance such Partner would have had if
the Regulatory Allocations were not part of this Agreement and all Partnership
items were allocated pursuant to Sections 4.1 and 4.2 hereof.
4.4 Other Allocation Rules.
----------------------
4.4.1 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.
4.4.2 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
17
<PAGE>
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,
each General Partner shall be allocated not less than it's Share 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 purposes, be allocated among the Partners so as to take into account 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 a Partner, 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 various
allocation methods to be elected pursuant to Exhibit 4.5.1 attached hereto shall
apply 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, except as provided in Exhibit 4.5.1, 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" 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.
18
<PAGE>
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 ss.301.6111-1T and (ii) the "designated person" for the purpose of
maintaining lists of investors in the Partnership pursuant to Section 6111 of
the Code and Temporary Treasury Regulation ss. 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. 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. Any reimbursement hereunder in excess of $20,000 per year
shall be subject to the approval of the Executive Committee.
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, and in each
such case, on a day which is no less than five (5) days prior to the estimated
tax payment dates of January 15, April 15, June 15 and September 15 of each
calendar year.
5.1.2 Priority. Available Cash plus an amount equal to the
--------
Minimum Tax Distributions and the "Holdings Distributions" (as that term is
defined in Section 5.1.2(b)) ("Distributable Cash") shall be distributed to the
Partners as follows:
(a) First, to each Partner in an amount equal to its
Minimum Tax Distribution as determined in accordance with Section 5.2;
(b) Next, to Petro Holdings, in an amount required by
Petro Holdings to pay debt service, ordinary and necessary operating and
administrative expenses, and in such other amounts as the Executive Committee
shall determine are necessary and proper (in compliance with any third party,
credit restrictions or covenants) for the orderly operation of Petro Holdings
(the "Holdings Distributions");
19
<PAGE>
(c) Next, to the Partners in proportion to their Sharing
Percentages, to the extent of any Unrecovered Capital therefor; and
(d) Thereafter, to the Partners in accordance with their
positive Capital Account balances after adjusting such Capital Account balances
to take into account that distributions under Section 5.1.2(a) through (c)
above.
5.1.3 Cash or In Kind. The Executive Committee shall have the
---------------
authority to pay distributions in cash or in kind with Partnership property. 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.
5.2 Minimum Tax Distributions. Tax distributions in an amount
-------------------------
sufficient to pay the federal, state and local Income Tax of the Partners
(collectively the "Minimum Tax Distributions" or each, individually, a "Minimum
Tax Distribution") shall be made to the Partners as follows:
(a) A Minimum Tax Distribution shall be made to Petro
Holdings in an amount equal to the Minimum Tax Distributions which are required
to be made by Petro Holdings pursuant to the terms and conditions of the Limited
Partnership Agreement of Petro Stopping Centers Holdings, L.P. dated July 15,
1999 (the "Petro Holdings Minimum Tax Distribution"); and
(b) A Minimum Tax Distribution shall be made to a
Partner, other than Petro Holdings, holding a Partnership Interest in an amount
equal to the U.S. Taxes Due for such Partner, less Cumulative Minimum Tax
Distributions. Notwithstanding the reductions required under this Section 5.2(b)
in no event will a Partner receive a distribution with respect to Minimum Tax
Distributions in an amount less than needed to pay such Partner's Current U.S.
Taxes Due.
Minimum Tax Distributions shall be determined without 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,
1999. Minimum Tax Distributions and all factors relevant to the determination
thereof shall be determined on a consolidated basis with the Partnership'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 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.
20
<PAGE>
5.4 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.
ARTICLE VI
MANAGEMENT
----------
6.1 Board of Directors.
------------------
6.1.1 Authority. The Partners hereby agree that pursuant to
---------
Section 17-403 of the Act, the Partnership shall be managed by a committee of
the Partners' representatives elected, designated or otherwise chosen as herein
provided (the "Board of Directors"). The Board of Directors shall constitute a
"committee" for purposes of Section 17-303(b)(7) of the Act. The Board of
Directors shall exercise all of the rights, powers and authority otherwise
vested in a general partner of a Delaware limited partnership formed under the
Act 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 or
desirable to accomplish the Purpose of the Partnership with respect to 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
to execute, perform and carry out agreements of any kind necessary to, or in
connection with or convenient or incidential 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. To the fullest extent permitted under the Act, the General
Partner shall have none of the rights and powers of a general partner of a
limited partnership formed under the Act and shall have no right or
responsibility with respect to the management or control of the business or
affairs of the Partnership; provided, however, that if under the Act any right
or power must be exercised by the General Partner in its capacity as a general
partner of the Partnership, or any action must be taken by the General Partner
in such capacity, then the General Partner agrees to exercise such right or
power or to take such action at the direction of the Board of Directors and in
conformity with such direction. The Partners further agree that the rights and
powers vested in the Board of Directors pursuant to this Section 6.1.1 are
vested in the Board of Directors pursuant to paragraph (a) of Section 17-403 of
the Act; provided, however, that to the extent such rights and powers, or any of
them, cannot be vested in the Board of Directors pursuant to paragraph (a) of
Section 17-403 of the Act, then the Partners agree that such rights and powers
have been delegated by the General Partner to the Board of Directors pursuant to
paragraph (c) of Section 17-403 of the Act and, to the fullest extent provided
by law, such delegation shall be irrevocable; provided further that in the
event, notwithstanding the agreement of the Partners to the contrary, the
delegation of any right or power provided herein may be revoked by the General
Partner, the Partners agree that any such revocation will only be effective, if
at all, upon 90 days prior written notice by the General Partner to each other
Partner. 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
21
<PAGE>
hereunder, except as expressly provided to the contrary herein, the following
powers are reserved exclusively to the Board of Directors unless delegated by
the Board of Directors to any Person:
(a) to employ, retain, and terminate a Chairman of the
Board of Directors ("Chairman"), who shall have the authority set forth in
Section 6.3.1 and, subject to the authority of the Chairman, 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.
(b) subject to the final review and approval of the
Executive Committee under ss.6.2.1(e), to amend or cancel any agreement (subject
to the provisions of such agreement), between the Partnership and a Partner or
Affiliate of a Partner, or enter into a new agreement between the Partnership
and a Partner or Affiliate of a Partner, provided that the terms of such
agreement are no less favorable than available from unrelated third parties.
(c) acquire any real property that serves or is intended
to serve as a truck stop in the business of the Partnership;
(d) as a franchisor, enter into a franchise agreement
with any Person; or
(e) to adopt the annual budget of the Partnership and to
approve any annual variance from the amount budgeted for capital expenditures;
(f) subject to existing employment agreements and to the
provisions of Section 6.3, to establish the limits of the Partnership's
officers' authority;
(g) to select auditors for the Partnership and to manage
the conduct and settlement of the Partnership's legal proceedings;
(h) to receive contributions to the capital of the
Partnership from Partners;
(i) to make distributions to Partners pursuant to
Section 5.2;
(j) to disburse other payments as provided for in this
Agreement;
(k) to communicate with the general public, if
necessary, regarding Partnership matters;
(l) 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 a Partnership Interest; and
(m) generally to provide all other executive and
administrative undertakings for and on behalf of the Partnership.
22
<PAGE>
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
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 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 consist of seven
-----------
(7) persons appointed by Petro Holdings as follows: Cardwell Sr., Cardwell Jr.,
K. T. Weir, N.B. Carlson, Robert Grussing IV, Martha P. Boyd, and Larry J. Zine.
The membership of the Board of Directors of the Partnership and the Board of
Directors of Petro Holdings shall be identical, and when changes are made in the
membership of the Board of Directors of Petro Holdings such changes shall be
reflected contemporaneously in the membership of the Board of Directors of the
Partnership.
6.1.5 Term; Vacancies. Each member of the Board of Directors
---------------
shall hold office until death, resignation or removal.
6.1.6 Voting. 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.
6.2 Executive Committee.
-------------------
6.2.1 Authority. The Partnership shall have an executive
---------
committee (the "Executive Committee") of the Board of Directors (which committee
shall also be the Environmental 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) during the period between meetings of the Board of
Directors, to take action with respect to matters as to which the Board of
Directors has authority to act.
(b) to terminate the employment of the Chairman and
Chief Executive Officer.
(c) to change or adopt any incentive compensation plans
for officers, employees and agents of the Partnership and to determine amounts
payable under such plans.
23
<PAGE>
(d) to approve the initial compensation of the officers
of the Partnership, and to approve any base compensation payable to an employee
or agent of the Partnership that exceeds $100,000 annually for such person.
(e) to approve any transaction (provided that such
transaction is material in the context of the Partnership's overall business)
entered into subsequent to the Effective Date, between the Partnership and a
Partner or a Partner of Petro Holdings, or their respective Affiliates.
(f) acting as the Environmental Compliance Committee, to
document, formulate, implement and oversee the environmental compliance policy
of the Partnership, which activity and responsibility shall be conducted by
unanimous vote of the members of such committee.
(g) to take such other actions as are specifically
provided for in this Agreement.
6.2.2 Composition. The Executive Committee shall consist of
-----------
three persons, as follows: Cardwell Sr., K. T. Weir and Robert Grussing IV. The
membership of the Executive Committee of the Partnership and of the Executive
Committee of Petro Holdings shall be identical, and when changes are made in the
membership of the Executive Committee of Petro Holdings such changes shall be
reflected contemporaneously in the membership of the Executive Committee of the
Partnership.
6.2.3 Voting. 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 Officers. The Partnership and Petro Holdings shall have the
--------
officers set forth in this Section 6.3 and such additional officers as the
Boards of Directors of the Partnership and Holdings may designate. The officers
of the Partnership and of Petro Holdings shall be identical and shall manage the
day-to-day affairs of the Partnership and Petro Holdings at the direction of
their respective Boards of Directors or Executive Committees.
6.3.1 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. The Partners hereby
appoint Cardwell Sr. as the initial Chairman, Chief Executive Officer and
President of the Partnership. After consultation with the Board of Directors
and/or the Executive Committee, the Chairman, so long as the Chairman is
Cardwell Sr., shall have the authority to hire, and to terminate the employment
of, any other officer or employee of the Partnership. If Cardwell Sr. is no
longer Chairman, the foregoing authority shall revert to the Board of Directors.
6.3.2 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. In the absence of the
24
<PAGE>
Chairman, 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.
6.3.3 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 case of the
incapacity or inability of the Chief Executive Officer to act, the President
shall assume the authority, and shall perform the duties, of the Chief Executive
Officer until such time as the Board of Directors shall determine otherwise.
6.3.4 Chief Financial Officer. The Partnership shall have a
-----------------------
Chief Financial Officer who shall serve under the direction of the Chief
Executive Officer.
6.3.5 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.
6.3.6 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 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.
6.3.7 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.
6.4 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.
6.5 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
25
<PAGE>
Secretary as to the identity of any Partner, the Persons who are authorized to
execute and deliver any instrument or document of the Partnership and any act or
failure to act by the Partnership or any other matter whatsoever involving the
Partnership or any Partner.
6.6 Meetings and Approval Requirements of Board of Directors and
------------------------------------------------------------
Committees.
- ----------
6.6.1 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.
6.6.2 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.
6.6.3 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.
6.6.4 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 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.
6.6.5 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, Mobil and Volvo, who also may be
serving on the Board of Directors of Petro Holdings, shall be present) shall be
necessary to constitute a quorum for the transaction of business.
6.6.6 Approval Requirements. 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.
6.6.7 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
26
<PAGE>
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.
ARTICLE VII
INDEMNIFICATION
---------------
7.1 General.
-------
(a) No current or former Partner of the Partnership or of
Petro Holdings, nor any of the shareholders, partners, officers, directors,
members, managers, employees and/or agents of such Partner and/or of such
Partner's Affiliates, including the tax matters partner, each member of the
Board of Directors of the Partnership and of Petro Holdings and each committee
thereof, the officers of the Partnership and of Petro Holdings and the
shareholders, officers, and directors of Warrant Holdings which serve in any of
those positions at the request of the Partners or of the Board of Directors of
the Partnership or of Petro Holdings (individually, an "Exculpated Party"),
shall be liable, responsible or accountable in damages or otherwise (i) to the
Partnership or to Petro Holdings, (ii) to any Partner or partner of Petro
Holdings (including Warrant Holdings, its officers, directors, and/or security
holders), or (iii) to any Affiliate of a Partner or of a partner of Petro
Holdings, 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) ("Indemnified
Loss") to any Person for any act or omission performed or omitted: (a) in good
faith on behalf of the Partnership or Petro Holdings or any partner of Petro
Holdings; (b) in a manner reasonably believed by such Exculpated Party to be
within the scope of the authority granted to such Exculpated Party by this
Agreement, the Board of Directors, or otherwise; and (c) in a manner not
constituting willful misconduct, fraud, breach of such Exculpated Party's
fiduciary duty of loyalty, or gross negligence.
(b) 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 attorney's
fees and 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.
(c) With respect to the foregoing, the Partners hereby
specifically agree that any Partner or Affiliate of any Partner or a partner of
Petro Holdings who may serve as an officer, director, and/or shareholder of
Warrant Holdings is doing so at the request of, and as an accommodation to, the
Partnership and to the Partners and their Affiliates and in furtherance of
Partnership business. Accordingly, any such Person serving as an officer,
director, and/or shareholder of Warrant Holdings shall be deemed to be an
Exculpated Party entitled to the full
27
<PAGE>
protections afforded an Exculpated Party or Indemnified Person under the
provisions of this Article VII.
7.2 Indemnification Procedures. The provisions of this Section 7.2
--------------------------
shall apply to any indemnification by the Partnership, including any
indemnification of an Exculpated Party.
7.2.1 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 entitled to be indemnified or held
harmless under this Agreement (an "Indemnified Person"), the Indemnified Person
shall notify the Partnership in writing of the Indemnified Loss or the assertion
of claim or commencement of action.
7.2.2 Reimbursement. In the case of an Indemnified Loss not
-------------
involving an assertion of claim or commencement of action by any third party,
the Partnership 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.
7.2.3 Defense by Partnership. 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 Partnership in writing
of such assertion or commencement. Subject to Section 7.2.4 below, the
Partnership shall, at its expense, assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Person, in which event the
Partnership 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.
7.2.4 Defense by Indemnified Person. If the Partnership fails to
-----------------------------
diligently promptly defend or settle the claim or action after notice, which
failure continues for more than thirty (30) days after such notice, then in that
event the Indemnified Person shall have the right to defend, at the sole cost
and expense of the Partnership, the claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified
Person to a final conclusion or settled. In such event, the Indemnified Person
shall have full control of such defense and proceedings, provided, however, that
without the Partnership's 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 Partnership is obligated to indemnify such
Indemnified Person, the Indemnified Person shall inform the Partnership of the
proposed settlement terms and if the Partnership is 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 Partnership must provide to the
Indemnified Person with respect to such claim shall be the amount of such bona
fide offer of settlement the Partnership was willing and able
28
<PAGE>
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 Partnership shall, at its sole cost and
expense, 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.
7.2.5 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
Partnership in writing, (ii) Section 7.2.4 above shall be applicable, or (iii)
the named parties to such action (including any impleaded parties) include both
the Partnership 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 Partnership. In the event any of the conditions set forth in
this Section 7.2.5 are met, the Partnership shall not have the right to assume
the defense of such action on behalf of the Indemnified 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 Section 7.2.5 are met, the Indemnified
Person shall have the right to select such Person's counsel, which counsel must
be reasonably satisfactory to the Partnership.
7.2.6 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
Partnership will be liable in accordance with its indemnity under this Agreement
shall give rise to liability of the Partnership unless the Partnership 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 Partnership 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.
7.2.7 Insurance. The liability of the Partnership 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 Partnership to pursue any remedies that may be available from
any third party to reduce the amount otherwise payable by the Partnership and
the Indemnified Person shall use reasonable efforts to assist and cooperate with
the Partnership (at the expense of the Partnership) in pursuing such remedies.
So long as the Partnership shall be diligently pursuing remedies against any
such third party, which remedies
29
<PAGE>
counsel for the Partnership (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 Partnership 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 the loss of interest or the cost of funds, as applicable) by
the Partnership, the Partnership may defer payment of amounts which they would
otherwise be obligated to pay hereunder to the extent that such third party may
be liable therefor. If in the opinion of the Indemnified Person, the Indemnified
Person has remedies available to it against third parties and the Partnership
does not have such remedies available to it against the same third parties, then
at the option of the Partnership, the Indemnified Person shall, at the sole cost
of the Partnership, exhaust available remedies against any such third party;
provided, however, that the Partnership shall use all reasonable efforts to
assist and cooperate with the Indemnified Person (at the expense of the
Partnership) in pursuing such remedies; and provided further, however, that the
Partnership 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 Partnership.
7.3 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 or
partner of Petro Holdings to personal liability.
ARTICLE VIII
AMENDMENTS
----------
8.1 Amendments. This Agreement may be amended if such amendment is
----------
unanimously approved by the Partners; 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 of 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 shall amend and revise Schedule A to this Agreement to properly
reflect any changes required to be reflected thereon by this Agreement.
ARTICLE IX
ADMISSIONS, EXITS AND TRANSFERS
-------------------------------
9.1 Restriction on Transfers by Partners. 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
Agreement, it being specifically understood among the Partners that Petro, Petro
Holdings, and Holdings GP, L.L.C. will pledge their Partnership Interests to
BankBoston, N.A. pursuant to the terms of the Amended and Restated Credit
Agreement.
9.2 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 Amended and
30
<PAGE>
Restated Credit Agreement contain a so-called "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 contrary, 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. Unless approved by the Executive
------------------------------
Committee, 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): (i) shall not be admitted as
a substituted Limited Partner, (ii) shall be entitled only to allocations and
distributions with respect to such Partnership Interest in accordance with this
Agreement, (iii) shall have no right to any information or, to the fullest
extent permitted by law, to an accounting of the affairs of the Partnership,
(iv) shall not be entitled to inspect the books or records of the Partnership,
and (v) shall not have any of the rights of a Partner under the Act or this
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 Termination of the Partnership. Except for Transfers of
------------------------------
Partnership Interests specifically permitted in this Agreement, 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.
31
<PAGE>
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"):
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 or (ii) within 90 days after the occurrence of such event, a
majority in interest of the remaining Partners (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
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
canceled in accordance with the Act. The Board of
32
<PAGE>
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 Partners in
-----------
accordance with Section 5.1.2.
ARTICLE XI
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 the
Cardwell Partners, Mobil, or Volvo any confidential information concerning the
Partnership; provided that the Cardwell Partners, Mobil and Volvo maintain the
confidentiality thereof.
11.1 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.
11.2 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.
11.3 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.
11.4 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.
11.5 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
33
<PAGE>
Partners 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.
11.6 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.
11.7 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.
11.8 Certificates. Partnership Interests may, at the discretion of the
------------
Board of Directors, be evidenced by certificates or other written instruments
evidencing the same.
11.9 Securities. The Partnership Interests are "Securities" governed
----------
by the terms of Article 8 of the Uniform Commercial Code.
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.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
GENERAL PARTNER
PETRO STOPPING CENTERS HOLDINGS, L.P.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
/s/ JAMES A. CARDWELL, JR.
------------------------------
JAMES A. CARDWELL, JR.
34
<PAGE>
PETRO HOLDINGS GP, L.L.C.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
LIMITED PARTNERS
35
<PAGE>
SCHEDULE 2.6
To the Fourth Amended and Restated
Limited Partnership Agreement of
Petro Stopping Centers, L.P.
July 23, 1999
1. PMPA Motor Fuels Franchise Agreement, dated July 23, 1999,
between the Partnership and Mobil Oil Corporation.
2. Master Supply Contract for Resale of Oils and Greases, dated
July 23, 1999 between the Partnership and Mobil Oil
Corporation.
3. Joint Operating and Supply Agreement dated as of July 23,
1999, between the Partnership and Volvo Trucks North America,
Inc.
4. Third Amended and Restated Indemnity and Hold Harmless
Agreement, dated July 23, 1999, between the Partnership and
James A. Cardwell, Sr.
5. Third Amended and Restated Indemnity and Hold Harmless
Agreement, dated July 23, 1999, between the Partnership and
James A. Cardwell, Jr.
6. Third Amended and Restated Indemnity and Hold Harmless
Agreement, dated July 23, 1999, between the Partnership and
JAJCO II, Inc.
7. Amended and Restated Indemnity and Hold Harmless Agreement
dated July 23, 1999, between the Partnership and Petro, Inc.
<PAGE>
EXHIBIT 4.5.1-OPERATING
Section 704(c) Allocation Methods
For purposes of the Fourth Amended and Restated Limited Partnership
Agreement (the "Agreement") to which this Exhibit 4.5.1 is attached, the
methodology and procedures set forth in this Exhibit 4.5.1 shall govern with
respect to the various allocation methods to be used by the Partnership under
Section 704(c) of the Code for purposes of Section 4.5.1 of the Agreement.
Section 1. Definitions. The various defined terms set forth in the
-----------
Agreement shall govern hereunder. In addition, the following definitions are
utilized for purposes of this Exhibit 4.5.1:
1.1 "Ceiling/Curative Difference" shall mean the total amount
of additional amortization, depletion, depreciation or other cost
recovery, as compared to what would apply if the Ceiling Method was
adopted and utilized in determining Section 704(c) Allocations as of
the Effective Date, that would be allocated to Volvo on an estimated
annualized basis as a Partner in the Holdings Partnership if the
Curative Method was adopted and utilized in determining Section 704(c)
Allocations as of the Effective Date, with respect to all Partners of
the Holdings Partnership.
1.2 "Ceiling Method" shall mean the traditional method subject
to the ceiling rule as set forth in Treasury Regulation (S) 1.704-
3(b).
1.3 "Curative Method" shall mean the traditional method
subject to curative allocations of depreciation deductions (as
illustrated in Example 2 of Treasury Regulation (S) 1.704-3(c)(4))
as set forth in Treasury Regulation (S) 1.704-3(c).
1.4 "Holdings Partnership" shall mean Petro Stopping Centers
Holdings, L.P., a Delaware partnership, subject to the terms and
conditions of the Limited Partnership Agreement of even date with the
Agreement.
1.5 "Remedial Method" shall mean the remedial method as set
forth in Treasury Regulation (S) 1.704-3(d).
1.6 "Revaluation Event" shall mean any contribution of money
or property to the capital of the Partnership by a new or existing
Partner which, pursuant to Section 704(c) of the Code and Treasury
Regulation (S) 1.704-3, results in the requirement to make 704(c)
Allocations.
1.7 "Section 704(c) Layer" shall mean the various assets to
which it is necessary to make Section 704(c) Allocations between
various Partners of either the Partnership or Holdings Partnership, it
being understood that for each time there is a Revaluation Event, this
creates a Section 704(c) Layer.
<PAGE>
1.8 "Section 704(c) Operating Rules" shall mean the
administrative and regulatory operating rules which govern the
application and adoption of the various permitted Section 704(c)
allocation methods as set forth under Treasury Regulation (S) 1.704-3.
1.9 "704(c) Report" is defined in Section 4, hereof.
1.10 "Target Difference" is defined in Section 3, hereof.
1.11 "Volvo" shall mean Volvo Trucks North America, Inc. as a
Partner in the Holdings Partnership.
Section 2. Occurrence of Revaluation Events. The cash contribution by
--------------------------------
Volvo to the Holdings Partnership will result in a Revaluation Event as of the
Effective Date for purposes of Section 704(c) of the Code. For this purpose, the
various Section 704(c) methods, and the methodology and procedures related to
their use, as set forth in Section 3, below, shall apply with respect to the
cash contribution by Volvo to the Holdings Partnership. For any subsequent
Revaluation Event, however, unless the Partners unanimously agree in writing
otherwise, the Ceiling Method shall apply.
Section 3. Section 704(c) Methods Which Apply. For purposes of the
Revaluation Event resulting from the cash contribution to be made by Volvo to
the Holdings Partnership and for any new partnership formed as a result of the
termination of the Partnership pursuant to Section 708(b)(1)(B) of the Code, and
consistent with the Section 704(c) Operating Rules, the Partnership shall adopt
a combination of the Ceiling Method, the Curative Method and the Remedial Method
as to the various assets of the Partnership such that the combined effect of the
adoption of these methods, in conjunction with the Section 704(c) elections made
by the Holdings Partnership, will be that Volvo receives an additional
allocation as a Partner of the Holdings Partnership of amortization, depletion,
depreciation or other cost recovery which is equal to fifty percent (50%) of the
Ceiling/Curative Difference as of the Effective Date (the "Target Difference").
In the event the Partnership and the Holdings Partnership are unable to adopt a
combination of the Ceiling Method, Curative Method and Remedial Method to obtain
an amount of additional amortization, depletion, depreciation or other cost
recovery allocated from the Holdings Partnership to Volvo which is equal to the
Target Difference, the Partnership and the Holdings Partnership shall adopt a
combination of the Ceiling Method, the Curative Method and Remedial Method as
arrives as close to the Target Difference as possible; provided, however, if
there are two or more alternative approaches which exceed and/or fall short of
the Target Difference, no approach which exceeds the Target Difference shall be
utilized if it exceeds the Target Difference by an amount which is four percent
(4%) of the Target Difference (in other words, a total amount which is 52.0% of
the Ceiling/Curative Difference) and, in a case where an alternative approach
would exceed the Target Difference by more than four percent (4%) of the Target
Difference, another alternative approach shall be utilized even if the use of
such approach results in allocations to Volvo which are less than the Target
Difference. Notwithstanding the preceding provisions, the Remedial Method shall
be utilized only as a method of last resort and only if the use of a combination
of the Ceiling Method and Curative Method is unable to achieve a result which is
within ninety-six percent (96%) of the Target Difference (in other words, a
total amount which is 48.0% of the Ceiling/Curative Difference)
<PAGE>
and, if the Remedial Method is utilized, it shall be subject to the limitations
of the preceding sentence.
Section 4. Procedures for Determining Methods to Elect. As soon as
-------------------------------------------
practicable after the date of the Agreement, the accounting firm for the
Partnership shall determine the various Section 704(c) Layers which apply with
respect to the Holdings Partnership, the Partnership and any subsidiary
partnerships and shall, utilizing its reasonable and good faith discretion and
subject to Section 3, determine the combination of the Ceiling Method, Curative
Method and Remedial Method which is estimated to result in Volvo receiving an
allocation from the Holdings Partnership of amortization, depletion,
depreciation and other cost recovery as near to the Target Difference as is
possible under the circumstances. Within thirty (30) days of making such
calculations and determinations, such accounting firm for the Partnership shall
issue a written report (the "704(c) Report") to each Partner recommending the
various combinations of the Ceiling Method, Curative Method and Remedial Method
to apply to the various Section 704(c) Layers within the Holdings Partnership,
the Partnership and each subsidiary partnership for each Partner's review and
comment. The 704(c) Report shall provide such assumptions, explanations, numeric
projections and other information so as to enable the Partners to understand the
704(c) Report and make an informed decision as to the accuracy of the
information contained in 704(c) Report and the validity of the recommendations
contained therein. Prior to its final adoption, the 704(c) Report may be amended
and supplemented by the accounting firm for the Partnership from time to time.
After receiving the 704(c) Report, the Partners may engage in such discussions
and propose any alternatives to the approaches recommended in the 704(c) Report
and the 704(c) Report may be amended as the Partners agree. The Partnership and
the Partners shall agree on the final version of the 704(c) Report by no later
than forty-five (45) days prior to the final due date (with extensions) of the
Partnership tax return for the 1999 Fiscal Year, and if the Partners are unable
to agree on a final version of the 704(c) Report by such date, then the 704(c)
Report as issued and supplemented by the accounting firm for the Partnership
shall control. Notwithstanding anything herein to the contrary, in no event
shall the various Section 704(c) allocation methods to apply for the Partnership
be elected at a time which is later than that allowed under the Section 704(c)
Operating Rules.
Section 5. Binding Effect of Estimates. The Partners understand and
---------------------------
agree that the procedures under Section 4 as well as the 704(c) Report finally
adopted will utilize good faith estimates by the Partnership's accountants and
the Partners agree that, once the various Section 704(c) methods are elected in
accordance with the 704(c) Report as finally adopted, the actual results of
these elections may differ from the estimates and/or projections agreed upon by
the Partners and set forth in the final 704(c) Report which is adopted.
<PAGE>
SCHEDULE A
to
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
PETRO STOPPING CENTERS, L.P.
July 24, 1999
CAPTIAL CONTRIBUTIONS AND SHARING PERCENTAGES
OF THE PARTNERS
General Partner Captial Contribution Sharing Percentages
- --------------- -------------------- -------------------
Petro, Inc. $ 431,000 0.2537 %
Limited Partners
- ----------------
Petro Stopping Centers Holdings, L.P. 167,657,000 98.7156
James A. Cardwell, Jr. 431,000 0.2537
Petro Holdings GP, L.L.C. 1,320,000 0.7770
------------ --------
Totals $169,838,000 100.0000 %
============ ==========
Petro, Inc. Petro Stopping Centers Holdings, L.P.
By: /s/ JAMES A. CARDWELL, SR. By: /s/ JAMES A. CARDWELL, SR.
--------------------------- ---------------------------
Authorized Officer Authorized Officer
GENERAL PARTNER
/s/ JAMES A. CARDWELL, JR.
---------------------------
JAMES A. CARDWELL, JR.
Petro Holdings GP, L.L.C.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
LIMITED PARTNERS
<PAGE>
EXHIBIT 10.63
================================================================================
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS HOLDINGS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY AND AMONG
PETRO, INC.
As General Partner
AND
JAMES A. CARDWELL, SR.
JAMES A. CARDWELL, JR.
JAJCO II, INC.
PETRO, INC.
MOBIL LONG HAUL INC.
VOLVO PETRO HOLDINGS, LLC
PETRO WARRANT HOLDINGS CORPORATION
As Limited Partners
July 15, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS............................................................................. 3
1.1 Definitions.................................................................... 3
1.2 Interpretation................................................................. 13
ARTICLE II
GENERAL PROVISIONS...................................................................... 13
2.1 Formation...................................................................... 13
2.2 Partnership Name............................................................... 13
2.3 Purpose........................................................................ 13
2.4 Principal Place of Business.................................................... 13
2.5 Term........................................................................... 13
2.6 Filings........................................................................ 14
2.6.1 Status................................................................ 14
2.6.2 Dissolution........................................................... 14
2.7 Limited Partner Powers......................................................... 14
ARTICLE III
CAPITALIZATION.......................................................................... 14
3.1 Capital Contributions.......................................................... 14
3.1.1 General............................................................... 14
3.1.2 Capital Calls......................................................... 15
3.2 Conversion of Class B Preferred Partnership Interest........................... 15
3.3 Priority of Expenditures....................................................... 16
3.3.1 First Priority........................................................ 16
3.3.2 Second Priority....................................................... 16
3.3.3 Third Priority........................................................ 16
3.3.4 Fourth Priority....................................................... 16
3.3.5 Fifth Priority........................................................ 16
3.4 Other Matters.................................................................. 16
3.4.1 No Return of Capital.................................................. 16
3.4.2 No General Partner Liability.......................................... 16
3.4.3 No Limited Partner Liability.......................................... 16
ARTICLE IV
ALLOCATIONS............................................................................. 16
4.1 Gross Income Allocation........................................................ 16
4.2 Profits........................................................................ 16
4.2.1 To Losses............................................................. 16
4.2.2 To Common............................................................. 17
4.3 Losses......................................................................... 17
4.3.1 To Common............................................................. 17
4.3.2 To Common Unrecovered Capital......................................... 17
4.3.3 To Preferred Unrecovered Capital. .................................... 17
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4.3.4 Residual. ............................................................ 17
4.3.5 Limit................................................................. 17
4.4 Special Allocations............................................................ 17
4.4.1 Minimum Gain Chargeback............................................... 17
4.4.2 Partner Nonrecourse Debt Minimum Gain Chargeback...................... 18
4.4.3 Qualified Income Offset............................................... 18
4.4.4 Basis Adjustments..................................................... 18
4.4.5 Nonrecourse Deductions................................................ 19
4.4.6 Partner Nonrecourse Deductions........................................ 19
4.4.7 Allocation of Self-Charged Interest................................... 19
4.4.8 Sharing of Excess Nonrecourse Liabilities............................. 19
4.4.9 Curative Allocations.................................................. 19
4.5 Other Allocation Rules......................................................... 19
4.5.1 Positive Basis Partners............................................... 19
4.5.2 Timing................................................................ 19
4.5.3 Method................................................................ 19
4.6 Tax Allocations: Code Section 704(c).......................................... 20
4.6.1 Section 704 (c)....................................................... 20
4.6.2 Election.............................................................. 20
4.7 Tax Matters Partner............................................................ 20
4.7.1 Appointment........................................................... 20
4.7.2 Elections............................................................. 20
4.7.3 Miscellaneous......................................................... 21
4.7.4 Reimbursement......................................................... 21
ARTICLE V
DISTRIBUTIONS........................................................................... 21
5.1 Distributions.................................................................. 21
5.1.1 Authority............................................................. 21
5.1.2 Priority of Cash Distributions........................................ 21
5.2 Minimum Tax Distributions...................................................... 22
5.3 Distribution to Limited Partners............................................... 22
5.4 Redemption of Preferred Partnership Interests.................................. 22
5.4.1 Class A Preferred Partnership Interests............................... 22
5.4.2 Class B Preferred Partnership Interests............................... 23
5.4.3 Early Redemption...................................................... 23
5.4.4 Failure to Redeem..................................................... 23
5.5 Limitation of Distributions.................................................... 23
ARTICLE VI
MANAGEMENT.............................................................................. 24
6.1 Board of Directors............................................................. 24
6.1.1 Authority............................................................. 24
6.1.2 Limitations on Authority.............................................. 25
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6.1.3 Duties and Obligations................................................ 26
6.1.4 Composition........................................................... 26
6.1.5 Term; Vacancies....................................................... 26
6.1.6 Voting................................................................ 26
6.2 Executive Committee............................................................ 27
6.2.1 Authority............................................................. 27
6.2.2 Composition........................................................... 27
6.2.3 Voting................................................................ 28
6.3 Officers....................................................................... 28
6.3.1 Chairman.............................................................. 28
6.3.2 Chief Executive Officer. ............................................. 28
6.3.3 President............................................................. 28
6.3.4 Chief Financial Officer............................................... 28
6.3.5 Secretary............................................................. 28
6.3.6 Limitation............................................................ 29
6.3.7 Authority Generally................................................... 29
6.4 Major Decisions................................................................ 29
6.4.1 In General............................................................ 29
6.4.2 Partner Veto Rights................................................... 29
6.4.3 Additional Limitations on Actions of the Partnership.................. 29
6.4.4 Voting................................................................ 30
6.5 Right to Rely on Chairman or Secretary......................................... 30
6.6 Meetings and Approval Requirements of Board of Directors and Committees........ 30
6.6.1 Regular Meetings...................................................... 30
6.6.2 Special Meetings...................................................... 30
6.6.3 Telephonic Meetings................................................... 30
6.6.4 Notices............................................................... 30
6.6.5 Quorum................................................................ 31
6.6.6 Approval Requirements................................................. 31
6.6.7 Written Consents. .................................................... 31
ARTICLE VII
INDEMNIFICATION......................................................................... 31
7.1 General........................................................................ 31
7.2 Indemnification Procedures..................................................... 32
7.2.1 Notice................................................................ 32
7.2.2 Reimbursement......................................................... 32
7.2.3 Defense by Partnership................................................ 32
7.2.4 Defense by Indemnified Person......................................... 32
7.2.5 Fees and Expenses..................................................... 33
7.2.6 Periodic Payments..................................................... 33
7.2.7 Insurance............................................................. 34
7.3 No Personal Liability for Indemnification...................................... 34
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ARTICLE VIII
AMENDMENTS.............................................................................. 34
8.1 Amendments. ................................................................... 34
ARTICLE IX
ADMISSIONS, EXITS AND TRANSFERS......................................................... 35
9.1 Restriction on Transfers by Partners........................................... 35
9.2 Transfers in Contravention..................................................... 35
9.3 Transfers to Affiliates........................................................ 35
9.4 Admission of Limited Partners.................................................. 36
9.4.1 An Affiliate.......................................................... 36
9.4.2 Other Admissions...................................................... 36
9.5 General Right of First Refusal................................................. 36
9.5.1 Warrant Holdings...................................................... 36
9.5.2 Proposed Transfer..................................................... 36
9.5.3 Partnership Option Period............................................. 37
9.5.4 Partner Option Period................................................. 37
9.5.5 Closing............................................................... 37
9.5.6 Applicability of Restrictions......................................... 37
9.6 Cardwell Buy-Sell.............................................................. 37
9.6.1 Notice of Cardwell Buy-Sell........................................... 37
9.6.2 Response.............................................................. 38
9.6.3 Buy Option............................................................ 39
9.6.4 Sell Option........................................................... 39
9.6.5 Purchase Price........................................................ 39
9.6.6 Closing; Payment...................................................... 39
9.6.7 Failure to Perform.................................................... 40
9.7 Sale, Merger, Consolidation.................................................... 40
9.7.1 Notice of Global Offer................................................ 41
9.7.2 Acceptance of Global Offer............................................ 41
9.7.3 Closing; Payment...................................................... 41
9.8 Rights Upon Transfer........................................................... 42
9.9 Change of Control Restriction.................................................. 42
9.10 Pledge of Partnership Interests................................................ 43
9.11 Rights of Unadmitted Assignees................................................. 43
9.12 Distributions and Allocations in Respect to Transferred Interests.............. 43
9.13 Termination of the Partnership................................................. 43
ARTICLE X
DISSOLUTION AND WINDING UP.............................................................. 43
10.1 No Termination................................................................. 43
10.2 Events of Dissolution.......................................................... 44
10.2.1 Expiration............................................................ 44
10.2.2 Executive Committee................................................... 44
10.2.3 Impossibility......................................................... 44
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10.2.4 General Partner Withdrawal............................................ 44
10.2.5 Consent. ............................................................. 44
10.2.6 Judicial Dissolution.................................................. 44
10.3 Winding Up..................................................................... 44
10.3.1 To Creditors.......................................................... 44
10.3.2 To Partners........................................................... 44
ARTICLE XI
NON-COMPETITION AGREEMENT............................................................... 45
11.1 Covenant Not to Compete........................................................ 45
11.1.1 Cardwell.............................................................. 45
11.1.2 Mobil and Volvo....................................................... 46
11.1.3 No Solicitation....................................................... 46
11.1.4 Reformation........................................................... 46
11.2 Ownership in Publicly Traded Corporation....................................... 46
ARTICLE XII
INITIAL PUBLIC OFFERING................................................................. 47
12.1 Cardwell Partners Demand....................................................... 47
12.1.1 Opinion............................................................... 47
12.1.2 Plan.................................................................. 47
12.2 Rights of Mobil and Volvo...................................................... 47
12.2.1 Response.............................................................. 47
12.2.2 Failure to Respond.................................................... 48
12.3 Purchase....................................................................... 48
12.4 Assistance..................................................................... 49
12.5 Minimum Cardwell Purchase Price................................................ 49
ARTICLE XIII
MISCELLANEOUS........................................................................... 49
13.1 Amended and Restated Credit Agreement.......................................... 49
13.2 Confidential Information....................................................... 49
13.3 Financial Reports.............................................................. 49
13.4 Binding Effect................................................................. 49
13.5 Severability................................................................... 49
13.6 Governing Law.................................................................. 50
13.7 Not for Benefit of Creditors................................................... 50
13.8 Counterpart Execution.......................................................... 50
13.9 Sole and Absolute Discretion................................................... 50
13.10 Certificates................................................................... 50
</TABLE>
v
<PAGE>
SCHEDULES AND EXHIBITS
Schedule A - Capital Contributions and Sharing Percentages of the Partners
Exhibit 4.6.1 - Section 704(c) Allocation Methods
i
<PAGE>
LIMITED PARTNERSHIP AGREEMENT
OF
PETRO STOPPING CENTERS HOLDINGS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
------------------------------
THIS LIMITED PARTNERSHIP AGREEMENT OF PETRO STOPPING CENTERS HOLDINGS, L.P.
(the "Partnership") is entered into as of the 15th day of July 1999 by and among
Petro, Inc., a Texas corporation, ("Petro") as the General Partner and as a
Limited Partner, James A. Cardwell, Sr. ("Cardwell Sr."), James A. Cardwell, Jr.
("Cardwell Jr."), JAJCO II, Inc., a Delaware corporation ("JAJCO II," and,
together with Petro, Cardwell Sr., and Cardwell Jr., the "Cardwell Partners"),
Mobil Long Haul Inc., a Delaware corporation ("Mobil"), Volvo Petro Holdings,
LLC, a Delaware limited liability company ("Volvo"), and Petro Warrant Holdings
Corporation, a Delaware corporation ("Warrant Holdings") 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. The Certificate of Limited partnership of the
Partnership was filed in the Office of the Secretary of State of the State of
Delaware on July 6, 1999.
RECITALS
A. As of the date of this Agreement, the Cardwell Partners, Mobil, Petro
Holdings LP Corp., a Delaware corporation ("Holdings LP"), Petro Holdings GP
Corp., a Delaware corporation ("Holdings GP", together with Holdings LP, the
"Chartwell Partners"), and Kirschner Investments, a Pennsylvania general
partnership ("Kirschner") are general or limited partners in Petro Stopping
Centers, L.P., a Delaware limited partnership ("Petro Operating").
B. Pursuant to that certain Partnership Interest Subscription and
Purchase Agreement to be dated as of July 23, 1999, among Petro, the Chartwell
Partners, Mobil, the Cardwell Partners, Volvo, Warrant Holdings, and Petro
Operating and to that certain Purchase Agreement to be dated July 19, 1999,
among the Partnership, Warrant Holdings, Petro Holdings Financial Corporation, a
Delaware corporation, First Union Capital Markets Corp. and CIBC World Markets
Corp., and to certain other related agreements and transactions:
(1) Petro will exchange a portion of its general partnership interest
in Petro Operating for an additional limited partnership interest
in Petro Operating and will retain a one-quarter of one percent
(0.25%) general partnership interest in Petro Operating;
(2) Immediately thereafter, certain of the partners in Petro
Operating will exchange their partnership interests in Petro
Operating for partnership interests in the Partnership as
follows:
(a) Petro will exchange a portion of its common limited
partnership interest in Petro Operating for a general
partnership interest in the Partnership;
1
<PAGE>
(b) Cardwell Jr. will exchange a portion of his common limited
partnership in Petro Operating for a common limited
partnership interest in the Partnership and will retain a
one-quarter of one percent (0.25%) common limited
partnership interest in Petro Operating;
(c) Cardwell Sr., JAJCO and Mobil will exchange all of their
common limited partnership interests in Petro Operating for
common limited partnership interests in the Partnership, and
Petro will exchange its remaining common limited partnership
interests in Petro Operating for common limited partnership
interests in the Partnership;
(d) The Cardwell Partners and Mobil will exchange their
preferred limited partnership interests in Petro Operating
for preferred limited partnership interests (designated
"Class A Preferred Partnership Interests") in the
Partnership;
(3) Immediately following the above-described transactions:
(a) Mobil will make a cash investment in the Partnership in
exchange for a convertible preferred limited partnership
interest (designated "Class B Preferred Partnership
Interest") in the Partnership;
(b) Volvo will make a cash investment in the Partnership in
exchange for a common limited partnership interest in the
Partnership;
(c) Warrant Holdings will sell certain Warrants (the "Warrants")
to the Partnership and will use the proceeds of such sale to
purchase a ten percent (10%) common limited partnership
interest in the Partnership;
(d) The Partnership will issue 15% Senior Discount Notes due
2008 (the "Senior Discount Notes") along with the Warrants
purchased from Warrant Holdings; and
(e) The Partnership (using the proceeds of the Volvo and Mobil
cash investments in the Partnership and of the sale of the
Senior Discount Notes and Warrants) will purchase (i) the
common limited partnership interests in Petro Operating
owned by Holdings LP and by Kirschner and (ii) all of the
membership interests in Petro Holdings GP, L.L.C. ("Holdings
GP, L.L.C."), a Delaware limited liability company organized
by Holdings LP and the surviving entity in a merger with
Holdings GP, whereupon the general partnership interest
owned by Holdings GP, L.L.C. will be immediately converted
into a limited partnership interest in Petro Operating.
2
<PAGE>
C. Upon closing of the above-described transactions: (i) Petro will be
the sole general partner of the Partnership; (ii) the Cardwell Partners, Mobil,
Volvo, and Warrant Holdings will be the limited partners of the Partnership;
(iii) Petro, which will own a one-half of one percent (0.5%) general partnership
interest, will be the sole general partner of Petro Operating; and (iv) the
Partnership, Cardwell Jr., and Holdings GP, L.L.C. will be the limited partners
of Petro Operating. The initial preferred and common limited partnership capital
contributions contemplated by the foregoing transactions will be reflected, when
made, on Schedule A, which will be attached hereto and made a part hereof as
more particularly described in Section 3.1.1 below.
AGREEMENT
---------
FOR AND IN CONSIDERATION of the mutual covenants, rights, and obligations
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which each Partner acknowledges and confesses, the
parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. In addition to the terms defined elsewhere in this
-----------
Agreement, the following terms used in this Agreement shall have the following
meanings :
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 "Affiliate" means, when used with reference to a specified
---------
Person,
3
<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 or manager 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, manager, 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.
(c) For the purposes of the definition of "Affiliate," the
term "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.
1.1.5 "Aggregate Distribution Shortfall" means a Partner's total
--------------------------------
Distribution Shortfalls, if any, since the Effective Date.
1.1.6 "Agreement" or "Partnership Agreement" means this Limited
------------------------------------
Partnership Agreement as it may be amended from time to time.
1.1.7 "Amended and Restated Credit Agreement" means the Second
-------------------------------------
Amended and Restated Revolving Credit and Term Loan Agreement to be dated as of
July 23, 1999, among the Partnership, Petro Operating, BankBoston, N.A., as
agent and a lender, and the lenders signatory thereto.
1.1.8 "Applicable Tax Rate" means a tax rate used for computing
-------------------
Minimum Tax Distributions consisting of the sum of (i) either the individual or
corporate maximum marginal income tax rate for federal income tax purposes based
on whether the Partner for which a Minimum Tax Distribution is being computed is
for federal income tax purposes (x) a corporation (other than an S corporation
under Section 1361 of the Code), in which case the maximum corporate federal tax
rate applies, (y) an individual, in which case the maximum individual federal
tax rate applies, or (z) a flow-through or disregarded entity, in which case the
maximum federal tax rate which applies shall be determined by the federal income
tax characterization of the taxpayer to which the flow-through tax attributes
are ultimately allocated, plus (ii) a reasonable overall state and local income
tax rate established from time to time by the Executive Committee.
1.1.9 "Article" means an Article of this Agreement.
-------
1.1.10 "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,
4
<PAGE>
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: amounts used to pay or establish reserves for
all Partnership expenses and fees; Minimum Tax Distributions; debt payments
including principal, premium and interest, fees and expenses; and in the case of
each such deduction, to the extent not funded by Capital Contributions.
1.1.11 "Board of Directors" has the meaning set forth in Section 6.1.
------------------
1.1.12 "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.
1.1.13 "Book Value" shall mean the Gross Asset Value computed for
----------
purposes of maintaining Capital Accounts hereunder. References to "Book
----
Purposes" shall be similarly interpreted.
- --------
1.1.14 "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.
1.1.15 "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 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, or as to which such Partner is otherwise subjected to personal
liability;
(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, such Partner's
distributive share of Losses and any items in the nature of expenses or losses
which are specially allocated pursuant to Section 4.4 or Section 4.5 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 a Partnership Interest
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 9.12 hereof; and
5
<PAGE>
(d) In determining the amount of any liability for purposes
of subparagraph (a) and (b) of this definition, there shall be taken into
account Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) Upon the occurrence of any event which causes the
termination and dissolution of the Partnership, all Profits and Losses shall be
computed and allocated to the Capital Accounts of the Partners as of such date
of termination.
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 (i.e.,
the Capital Accounts with respect to the Gross Asset Value of property
contributed shall be such property's fair market value). 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 that the Executive Committee
determines (after consulting with, and upon the advice of, the independent
auditors then employed by the Partnership) 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 such modification 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) ,
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.
1.1.16 "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 deemed contributed to the Partnership
with respect to the interest in the Partnership held by such Partner pursuant to
Article III. The Capital Contributions of the Partners as of the Effective Date
are set forth on the initial Schedule A hereto and shall be designated as
"Preferred Capital Contributions" or "Common Capital Contributions" as set forth
therein. Although not credited to a Partner's Capital Account or to the
Unrecovered Capital attributable to a Class A Preferred Partnership Interest,
Schedule A shall include a notation which reflects the amount of the accrued and
unpaid preferred returns attributable to the preferred limited partnership
interests held by Mobil and the Cardwell Partners in Petro Operating through the
Effective Date (the "Contributed Preferred Return").
1.1.17 "Class A Preferred Partnership Interest" means the Preferred
--------------------------------------
Partnership Interests held by the Cardwell Partners and Mobil as set forth on
Schedule A, which Class A Preferred Partnership Interests (i) have the Preferred
Return set forth in Section 1.1.19, and (ii) are redeemable by the Partnership
on October 27, 2008, pursuant to the provisions of Section 5.4.1.
1.1.18 "Class B Preferred Partnership Interest" means the Preferred
--------------------------------------
Partnership Interest held by Mobil and which is convertible into a Common
Partnership Interest pursuant to
6
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Section 3.2 at any time prior to redemption, and if not so converted, is
redeemable on the tenth anniversary of the Effective Date pursuant to the
provisions of Section 5.4.2. The Class B Preferred Partnership Interest shall
have a Preferred Return as set forth in Section 1.1.20.
1.1.19 "Class A Preferred Return" means an amount, either paid in
------------------------
cash or accrued (at the sole discretion of the Executive Committee), which is
equal to: in the case of Mobil, nine and one-half percent (9.5%), and in the
case of the Cardwell Partners, eight percent (8%), in each case per annum, on an
amount equal to the sum of (i) such Partner's Unrecovered Capital on such Class
A Preferred Partnership Interest, (ii) the Contributed Preferred Return, and
(iii) any accrued Class A 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 Class A 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. The amount of any accrued but unpaid Class
A Preferred Return shall continue to accrue at the Class A Preferred Return rate
until paid in cash. Accordingly, the Class A Preferred Return shall be
calculated beginning on the Effective Date on the sum of the Unrecovered Capital
attributable to the Class A Preferred Partnership Interests plus the Contributed
Preferred Return.
1.1.20 "Class B Preferred Return" means an amount equal to twelve
------------------------
percent (12%) per annum on an amount equal to the sum of Mobil's Unrecovered
Capital on the Class B Preferred Interests and the accrued Class B Preferred
Return for the actual number of days for which the Class B Preferred Return is
being determined, cumulative and compounded semi-annually. The Class B Preferred
Return will not be payable in cash until the earlier of the Class B Conversion
Date or the Class B Redemption Date, at which time the accrued but unpaid Class
B Preferred Return shall be paid in cash subject only to the Partnership's
Available Cash and to the restrictions set forth in Section 5.5. The amount of
any accrued but unpaid Class B Preferred Return shall continue to accrue at the
Class B Preferred Return rate until paid in cash.
1.1.21 "Code" means the United States Internal Revenue Code of 1986,
----
as amended from time to time (or any corresponding provisions of succeeding
law).
1.1.22 "Common Partnership Interests" shall mean the Partnership
----------------------------
Interests owned by the Partners listed on Schedule A in respect of their Common
Capital Contributions.
1.1.23 "Contributed Preferred Return" shall have the meaning set
----------------------------
forth in Section 1.1.16.
1.1.24 "Cumulative Minimum Tax Distributions" means the total Minimum
------------------------------------
Tax Distributions made to a Partner since the Effective Date and shall exclude
the Minimum Tax Distribution for the current period which is being calculated to
be distributed pursuant to Section 5.2, hereof.
1.1.25 "Current U.S. Taxes Due" means with respect to any Fiscal
----------------------
Year, or part thereof, of the Partnership after the Effective Date, the
estimated Income Tax which each Partner would be required to pay if the
Applicable Tax Rate were applied to the sum of, (i) Profits
7
<PAGE>
(excluding the adjustments set forth in subparagraphs (a) through (f) of Section
1.1.59) and (ii) Section 704(c) Allocations allocated to a Partner for the
Fiscal Year, or part thereof, for which Current U.S. Taxes Due are being
computed hereunder; provided however, in the case of a Partner which, for
federal tax purposes, is a corporation (other than an S corporation under
Section 1361 of the Code) or which is a flow-through or disregarded entity in
which the flow-through tax attributes are ultimately allocated to a corporation
(other than an S corporation under Section 1361 of the Code), "Current U.S.
Taxes Due" shall have the same meaning as "U.S. Taxes Due."
1.1.26 "Distribution Shortfall" means, as to each Partner for a
----------------------
Fiscal Year, the positive difference, if any, between (i) the product of (A) the
Tax Distribution Ratio for the applicable Maximum Tax Partner for such Fiscal
Year, multiplied by (B) the amount of the Net Profits Allocation allocated for
such Fiscal Year (excluding any 704(c) Allocations) to the Partner for which the
Distribution Shortfall is being computed, less (ii) the Minimum Tax
Distributions made to such Partner for such Fiscal Year. Distribution Shortfalls
for the Partners shall be computed once all Minimum Tax Distributions for a
Fiscal Year have been made to the Partners and shall apply only with respect to
Minimum Tax Distributions made after the Effective Date.
1.1.27 "Effective Date" means July 24, 1999.
--------------
1.1.28 "Executive Committee" has the meaning set forth in Section
-------------------
6.2.
1.1.29 "Fair Market Value" means the enterprise value of the
-----------------
Partnership and Petro Operating , as agreed upon by all members of the Executive
Committee, failing which, the enterprise value of the Partnership and Petro
Operating as determined by an investment banking firm of national reputation
selected by all members of the Executive Committee; and with respect to a
Partnership or Petro Operating asset, the gross value of such asset as agreed
upon by the Board of Directors.
1.1.30 "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 (ii) any subsequent twelve (12) month period commencing on the next day
following the last day of the previous Fiscal Year and ending on the Friday
closest to December 31 of the same calendar year.
1.1.31 "GAAP" means generally accepted accounting principles and
----
practices in effect in the United States of America from time to time.
1.1.32 "General Partner" means Petro, as general partner 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.
1.1.33 "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 shall
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
8
<PAGE>
"economic effect" within the meaning of Regulation Section 1. 704-1(b)(2)(ii);
(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);
(iv) the Gross Asset Value of the Partnership property shall be adjusted to its
Fair Market Value as of the effective date of any conversion of the Class B
Preferred Partnership Interest to a Common Partnership Interest pursuant to
Section 3.2, hereof, as permitted under Regulation Section 1.704-1(b)(2)(ii);
and (v) the Gross Asset Value of an item of Partnership property shall be
adjusted to its Fair Market Value whenever it is distributed to a Partner, as
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
purposes of computing Profits or Losses, and other items allocated pursuant to
Section 4.3.
1.1.34 "Gross Income" means the total revenues of the Partnership
------------
computed in accordance with the principles of Section 61 of the Code, and which
shall be determined on a consolidated basis with the Partnership's subsidiaries.
1.1.35 "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).
1.1.36 "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, (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); and
(iv) any liability for alternative minimum tax under Section 55 of the Code.
1.1.37 "Indemnified Person" means those Persons identified in either
------------------
Section 7.1 or Section 7.2 as being entitled to receive the benefit of the
indemnity provided therein, and shall include 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.
1.1.38 "Indemnifying Party" means the Partnership.
------------------
1.1.39 "Limited Partner" means each of Cardwell Sr., Cardwell Jr.,
---------------
JAJCO II, Petro, Mobil, Volvo, Warrant Holdings and any other Person who becomes
a Limited Partner pursuant to the terms of this Agreement.
1.1.40 "Maximum Tax Partner" means, for each Fiscal Year, the Partner
-------------------
who has the greatest Tax Distribution Ratio for such Fiscal Year.
9
<PAGE>
1.1.41 "Minimum Tax Distribution" means the distribution provided
------------------------
for in Section 5.2.
1.1.42 "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.
1.1.43 "Net Profits Allocation" shall mean an allocation of Profits
----------------------
that causes, for any applicable periods beginning after the Effective Date, 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 be computed without the adjustments set forth in subparagraphs (a) through
(f) of Section 1.1.59 relative to the determination of "Profits and Losses" and
shall include all Section 704 (c) Allocations reportable by a Partner for
federal income tax purposes.
1.1.44 "Non-Compete Period" shall mean two (2) years after a Partner
------------------
(other than Warrant Holdings) and its Affiliates cease to be Partners.
1.1.45 "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).
1.1.46 "Nonrecourse Liability" has the meaning set forth in
---------------------
Regulations Section 1.752-1(a)(2).
1.1.47 "Partner Nonrecourse Debt" has the meaning set forth in
------------------------
Regulations Section 1.704-2(b)(4).
1.1.48 "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).
1.1.49 "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).
1.1.50 "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.
1.1.51 "Partnership" means Petro Stopping Centers Holdings, L.P., a
-----------
Delaware limited partnership.
1.1.52 "Partnership Interest" shall mean the partnership interests
--------------------
in the Partnership owned by the General and Limited Partners.
10
<PAGE>
1.1.53 "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).
1.1.54 "Person" means (i) any individual, (ii) any domestic
------
partnership, corporation, limited liability company, association, business, or
trust, (iii) any government or political subdivision thereof, or (iv) any
governmental agency or other entity. For purposes of this definition, "domestic"
shall mean an entity created or organized in the United States or under the law
of the United States or of any State, as defined in Code Section 7701(a)(4).
1.1.55 "Petro Operating" means Petro Stopping Centers, L.P., a
---------------
Delaware limited partnership owned by the Partnership.
1.1.56 "Positive Basis" shall mean, with respect to any Preferred
--------------
Partnership Interest and as of any time of calculation, 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.
1.1.57 "Preferred Partnership Interests" shall mean the two classes
-------------------------------
of preferred limited partnership interests (designated Class A and Class B)
owned by the Cardwell Partners and Mobil as listed on Schedule A and relating to
those Partners' Preferred Capital Contributions.
1.1.58 "Preferred Return" shall mean the annual return on a
----------------
Partner's Class A or Class B Preferred Partnership Interest (as the case may be)
as set forth in Sections 1.1.19 and 1.1.20, respectively.
1.1.59 "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;
11
<PAGE>
(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;
(e) Notwithstanding any other provision of this Article,
any items which are specially allocated pursuant to Section 4.4 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 shall be taken
into account in computing Profits or Losses.
1.1.60 "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).
1.1.61 "Section" means a Section of this Agreement.
-------
1.1.62 "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.
1.1.63 "Tax Distribution Ratio" means, for each Partner for an
----------------------
applicable Fiscal Year, the percentage yielded by dividing (i) the Minimum Tax
Distributions made to such Partner for the Fiscal Year, by (ii) the amount of
the Net Profits Allocation allocated to such Partner for the Fiscal Year.
1.1.64 "Unrecovered Capital" shall mean: with respect to any
-------------------
Preferred Partnership Interest, an amount equal to (X) the Preferred Capital
Contributions plus Gross Income allocated under Section 4.1 in respect of such
Interest less (Y) the sum of (i) the aggregate amount of Losses allocated to
such Preferred Partnership Interest under Sections 4.3.3 and (ii) cash
distributions to such Partner in respect of such Preferred Partnership Interest
pursuant to Sections 5.1.2(b) and 5.1.2(d); and, with respect to any Common
Partnership Interest, an amount equal to (X) the amount of Common Capital
Contributions plus Section 4.2 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, and (ii)
the cumulative amount of Losses allocated to such Common Partnership Interest
pursuant to Sections 4.3.2 and 4.3.4. A Partner's Unrecovered Capital with
respect to its Common Partnership Interest shall reflect any changes in the
Gross Asset Values of Partnership property which occur in accordance with the
provisions of Section 1.1.33 relating to the definition of "Gross Asset Value"
and any changes in the Gross Asset Value of
12
<PAGE>
Partnership property shall be allocated among Partners in accordance with their
respective Common Sharing Percentages in effect immediately prior to the event
or circumstance which gives rise to an adjustment of Gross Asset Value in
accordance with Section 1.1.33.
1.1.65 "U.S. Taxes Due" means with respect to any Fiscal Year or
--------------
part thereof of the Partnership after the Effective Date, the estimated Income
Tax which each Partner would be required to pay if the Applicable Tax Rate
(being utilized for such Fiscal Year) were applied to the Net Profits
Allocations allocated to such Partner as of the date through which U.S. Taxes
Due are being computed hereunder; and in the event a Partner is a corporation
(other than an S corporation under Section 1361 of the Code) and has no U.S.
Taxes Due pursuant to the preceding definition for the applicable period, but is
otherwise subject to alternative minimum tax under Section 55 of the Code as to
Net Profits Allocations (as adjusted for alternative minimum tax purposes)
through such date, "U.S. Taxes Due" shall mean the amount, if any, of the
resulting alternative minimum tax under Section 55 of the Code for the
applicable period as to such Net Profits Allocation.
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 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 Formation. Effective as of July 6, 1999, the date upon which the
---------
Certificate of Limited Partnership referred to in Section 2.5 was filed with the
Office of the Secretary of State of the State of Delaware, the Persons executing
this Agreement formed a limited partnership for the purposes set forth in this
Agreement. Capital Contributions by the Partners will be made as described in
the Recitals to this Agreement and, when made, will be reflected on Schedule A
attached hereto and made a part hereof for all purposes.
2.2 Partnership Name. The name of the Partnership shall be Petro Stopping
----------------
Centers Holdings, 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.
2.3 Purpose. The Purpose of the Partnership is (i) to own and manage the
-------
membership interests of Holdings GP, L.L.C., (ii) to own essentially all of the
limited partnership interests in Petro Operating, which operates, manages,
develops, franchises and/or owns truck stops and lubrication centers and certain
businesses in connection therewith, including but not limited to the ownership
of interests in other Persons and the sale of petroleum products, sundry
products, and services, and the operation of restaurants, (iii) to engage in
financing transactions and any and all lawful business related to the ownership
and operation of Petro Operating, and (iv) to transact any and all lawful
business for which a limited partnership may be organized incident to the Act
that is incident, necessary, and appropriate to the foregoing.
13
<PAGE>
2.4 Principal Place of Business. The Partnership's principal place of
---------------------------
business shall be 6080 Surety Drive, 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. The registered
agent for service of process on the Partnership in the State of Delaware or any
other jurisdiction shall be such Person as the Board of Directors of the
Partnership may designate from time to time.
2.5 Term. The term of the Partnership shall commence on July 6, 1999, the
----
date upon which the Certificate of Limited Partnership of the Partnership 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, 2025, unless the
Partnership is earlier dissolved by operation of law or in accordance with the
provisions of Article X.
2.6 Filings.
-------
2.6.1 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. The General Partner
shall execute and file such certificates, notices, statements and other
instruments and amendments thereto, and take any and all such other actions, as
the Board of Directors may direct in connection with perfecting and maintaining
the status of the Partnership in accordance with this Section 2.6.1.
2.6.2 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. The General Partner shall execute and file such certificates of
cancellation as the Board of Directors may direct in connection with actions
contemplated by this Section 2.6.2.
2.7 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 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, Petro Operating and others 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
14
<PAGE>
status as a Partner or an Affiliate of a Partner, (ii) the interests of the
Partnership or of Petro Operating, or (iii) any duty it may have to any Partner,
to the Partnership, or to Petro Operating.
ARTICLE III
CAPITALIZATION
--------------
3.1 Capital Contributions.
---------------------
3.1.1 General. Schedule A, which will be attached hereto, will
-------
reflect the capital contributions of the Partners as of the Effective Date and
will set forth the initial Preferred and Common Capital Contributions of the
Partners as of such date, the Contributed Preferred Return, and the relative
Preferred and Common Sharing Percentages of the Partners. Schedule A shall be
updated and amended from time to time to reflect additional Capital
Contributions and any changes to Sharing Percentages.
3.1.2 Capital Calls. Subject to Partner Veto Rights, the Board of
-------------
Directors may, by written notice, request the holders of Common Partnership
Interests (other than Warrant Holdings) 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 holding a
Common Partnership Interest, 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 3.1.2 are intended solely
to benefit the Partners and, to the fullest extent permitted by applicable law,
shall not confer 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. Similarly, the Board of Directors shall have
no duty to request additional Capital Contributions to benefit any creditor of
the Partnership. 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 3.1.2, the Common
Sharing Percentages shall be adjusted based upon, and assuming the Interests are
sold based upon, Fair Market Value.
3.2 Conversion of Class B Preferred Partnership Interest.
----------------------------------------------------
(a) At any time prior to redemption of the Class B
Preferred Partnership Interests and upon sixty (60) days prior written notice to
the Partnership (the "Class B Conversion Notice"), the holder of the Class B
Preferred Partnership Interest may convert the full amount of the Unrecovered
Capital of such Preferred Partnership Interest into a Common Partnership
Interest, which shall represent a 3.9% Common Partnership Interest (subject,
however, to subsequent dilution by, for example, the exercise, by certain
employees of the Partnership, of options to acquire Common Partnership Interests
in the Partnership). The conversion of the Class B Preferred Partnership
Interest shall be effective (the "Class B Conversion Date") as of the last day
of the fiscal quarter in which the Class B Conversion Notice is given to the
Partnership, provided, however, that the holder of the Class B Preferred
Partnership Interest shall have the right to convert to the above-
15
<PAGE>
described Common Partnership Interest prior to a sale, merger or consolidation
of the Partnership pursuant to the provisions of Section 9.6 or 9.7, or prior to
an IPO Incorporation pursuant to the provisions of Article XII. The delivery of
a Class B Conversion Notice in accordance with this Section 3.2 shall terminate
the right but not the obligation of the Partnership to redeem any Class B
Preferred Partnership Interests with respect to which such Class B Conversion
Notice has been given.
(b) At the Class B Conversion Date (or as soon thereafter as
is practicable), the amount of the accrued but unpaid Class B Preferred Return
shall be paid in cash to the holder thereof, subject only to the Partnership's
Available Cash and to the restrictions in Section 5.5. The accrued but unpaid
Class B Preferred Return shall continue to accrue at the Class B Preferred
Return rate until paid in cash.
3.3 Priority of Expenditures. Expenditures of the Partnership shall be
------------------------
paid in the following order of priority:
3.3.1 First Priority. To pay all administrative and operating
--------------
expenses;
3.3.2 Second Priority. To pay the Partnership's debt service;
---------------
3.3.3 Third Priority. To make Minimum Tax Distributions;
--------------
3.3.4 Fourth Priority. To make cash distributions in respect of the
---------------
Class A Preferred Partnership Interests and/or the Class B Preferred Partnership
Interests as contemplated by this Agreement; and
3.3.5 Fifth Priority. To make any other distributions to Partners.
--------------
3.4 Other Matters.
-------------
3.4.1 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.
3.4.2 No General Partner Liability. No General Partner shall have any
----------------------------
personal liability for the repayment of any Capital Contributions of any Limited
Partner.
3.4.3 No Limited Partner Liability. The Limited Partners shall not be
----------------------------
personally liable for the debts, liabilities, contracts or other obligations of
the Partnership.
16
<PAGE>
ARTICLE IV
ALLOCATIONS
-----------
Allocations of Profits, Losses, and other tax attributes set forth below
shall apply to the Partners' Capital Accounts and to the Partners as follows:
4.1 Gross Income Allocation. In any Fiscal Year, Gross Income shall be
-----------------------
allocated among the Partners holding Preferred Partnership Interests in
accordance with their Preferred Sharing Percentages, until the cumulative amount
of Gross Income allocated pursuant to this Section 4.1 is equal to the
cumulative amount of cash distributed in payment of unpaid Preferred Return
(including Contributed Preferred Return) to the Partners holding Preferred
Partnership Interests, including, without limitation, payments of unpaid
Preferred Return upon dissolution of the Partnership.
4.2 Profits. After giving effect to the special allocations set forth in
-------
Sections 4.1 and 4.4, Profits for any Fiscal Year shall be allocated:
4.2.1 To Losses. First, to those Partners to which Losses have
---------
previously been allocated, in reverse order of the allocations listed in Section
4.3 and to the extent of such Losses;
4.2.2 To Common. Thereafter, to the Partners in proportion to their
---------
Common Sharing Percentages.
4.3 Losses. After giving effect to the special allocations set forth in
------
Sections 4.1 and 4.4, Losses for any Fiscal Year shall be allocated:
4.3.1 To Common. First, among the Partners in accordance with their
---------
Common Sharing Percentages, until the cumulative amount of Losses allocated
pursuant to this Section 4.3.1 is equal to the cumulative amount of Profits
allocated pursuant to Section 4.2.2;
4.3.2 To Common Unrecovered Capital. Next, among the Partners holding
-----------------------------
Common Partnership Interests in accordance with their Common Sharing
Percentages, to the extent of their Unrecovered Capital; and
4.3.3 To Preferred Unrecovered Capital. Next, among the Partners
--------------------------------
holding Preferred Partnership Interests in accordance with their Preferred
Sharing Percentages, to the extent of their Unrecovered Capital; and
4.3.4 Residual. Thereafter, among the Partners holding Common
--------
Partnership Interests in accordance with their Common Sharing Percentages; and
4.3.5 Limit. The Losses allocated pursuant to this Section 4.3 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 4.3.5 shall be allocated to the General Partners in proportion to
their Common Sharing Percentages.
17
<PAGE>
4.4 Special Allocations. The following special allocations shall be made;
-------------------
4.4.1 Minimum Gain Chargeback. Notwithstanding anything to the
-----------------------
contrary in this Article IV, 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 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.
4.4.2 Partner Nonrecourse Debt Minimum Gain Chargeback.
------------------------------------------------
Notwithstanding anything to the contrary in this Article IV (other than Section
4.4.1 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 4.4.1, 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 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.
4.4.3 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)
18
<PAGE>
expenditure shall not be 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.
4.4.4 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.
4.4.5 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.
4.4.6 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).
4.4.7 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 4.4.7 shall not affect the amount of income or loss
otherwise allocable to such Partner.
4.4.8 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.
4.4.9 Curative Allocations. The allocations set forth in Sections
--------------------
4.4.1 through 4.4.3 (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations or
other items of Partnership income, gain, loss or deduction pursuant to this
Section 4.4.9. Therefore, notwithstanding any other provisions of this Article
IV (other than the Regulatory Allocations), the
19
<PAGE>
Partnership shall make such offsetting special allocations of Partnership
income, gain, loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Partner's Capital Account
balance is, to the extent possible, equal of the Capital Account balance such
Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Partnership items were allocated pursuant to Sections 4.1,
4.2, and 4.3 hereof.
4.5 Other Allocation Rules.
----------------------
4.5.1 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.
4.5.2 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.
4.5.3 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 Partner
shall be allocated not less than its share 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.
4.6 Tax Allocations: Code Section 704(c).
------------------------------------
4.6.1 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 purposes, be allocated among the Partners so as to take into account 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 a Partner, 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 various
allocation methods set forth in Exhibit 4.6.1 attached hereto shall apply with
respect to any such Section 704(c) Allocations. Allocations pursuant to this
Section 4.6.1 are solely for purposes of federal, state and local taxes, and,
except as provided in Exhibit 4.6.1, 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.
20
<PAGE>
4.6.2 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.
4.7 Tax Matters Partner.
-------------------
4.7.1 Appointment. By executing this Agreement, each Partner appoints
-----------
and designates Petro as the "tax matters partner" 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.
4.7.2 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.
4.7.3 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 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.
4.7.4 Reimbursement. 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. Any reimbursement hereunder in excess of $20,000 per year
shall be subject to the approval of the Executive Committee.
21
<PAGE>
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, and in each such
case, on a day which is no less than five (5) days prior to the estimated tax
payment dates of January 15, April 15, June 15 and September 15 of each calendar
year.
5.1.2 Priority of Cash Distributions. Available Cash, plus an amount
------------------------------
equal to the Minimum Tax Distributions ("Distributable Cash"), shall be
distributed to the Partners as follows:
(a) First, to each Partner in 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 Class A
Preferred Partnership Interests until each such Partner has received an amount
equal to the amount of its current Class A Preferred Return and any unpaid
accrued Class A Preferred Return (including the Contributed Preferred Return);
provided, however, if the Class B Preferred Partnership Interest has been
converted pursuant to Section 3.2, then the priority of distributions in this
Section 5.1.2(b) shall be first to the accrued but unpaid Class B Preferred
Return and then in respect of the Class A Preferred Partnership Interests, as
set forth above, provided, further, that the priority of distributions under
this Section 5.1.2(b) shall in all respects be subject to the provisions of
Section 5.4.4;
(c) Next, pro rata to those Partners who have Aggregate
Distribution Shortfalls until each Partner has received an amount equal to the
Partner's Aggregate Distribution Shortfall;
(d) Next, to the Partners in proportion to their Preferred
Sharing Percentages to the extent of any Unrecovered Capital therefor;
(e) Next, to the Partners in proportion to their Common
Sharing Percentages to the extent of any Unrecovered Capital therefor; and
(f) Thereafter, to the Partners in accordance with their
positive Capital Account balances after adjusting such Capital Account balances
to take into account the distributions under Sections 5.1.2(a) through (e)
above.
5.2 Minimum Tax Distributions. Pursuant to this Section 5.2, a
-------------------------
distribution for the payment of federal, state and local Income Taxes for a
Partner (a "Minimum Tax Distribution") for each applicable period shall be made
to a Partner holding a Common Partnership Interest in an amount equal to the
U.S. Taxes Due for such Partner, less Cumulative Minimum Tax Distributions. In
addition, any Minimum Tax Distributions for a current Fiscal Year shall be
reduced by any other
22
<PAGE>
distributions made to a Partner with respect to its Common Partnership Interest
but shall not be reduced for distributions, if any, made with respect to a
Partner's Preferred Partnership Interest.
Notwithstanding the reductions required under this Section 5.2, in no event
will a Partner receive a distribution with respect to Minimum Tax Distributions
in an amount less than needed to pay such Partner's Current U.S. Taxes Due.
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 hereunder 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,
1999. Minimum Tax Distributions and all factors relevant to the determination
thereof shall be determined on a consolidated basis with the Partnership'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 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.
---------------------------------------------
5.4.1 Class A Preferred Partnership Interests. On October 27, 2008
---------------------------------------
(the "Class A Redemption Date"), the Partnership shall redeem the Class A
Preferred Partnership Interests by distributing to the Partners holding such
interests amounts equal to the Unrecovered Capital with respect thereto and any
unpaid and accrued Class A Preferred Return (including the Contributed Preferred
Return) with respect thereto through the date of redemption. Upon redemption of
any Class A Preferred Partnership interest in accordance with this Section 5.4.1
such Class A Preferred Partnership Interest shall be deemed canceled.
5.4.2 Class B Preferred Partnership Interests. On the tenth
---------------------------------------
anniversary of the Effective Date (the "Class B Redemption Date"), if the Class
A Preferred Partnership Interests have been fully redeemed pursuant to the
provisions of Section 5.4.1 and if the Class B Preferred Interests have not been
previously converted pursuant to the provisions of Section 3.2, the Partnership
shall redeem the Class B Preferred Partnership Interests by distributing to the
Partners holding such interests amounts equal to the Unrecovered Capital with
respect thereto and any unpaid and accrued Preferred Return with respect thereto
through the date of redemption. Upon redemption of any Class B Preferred
Partnership Interest in accordance with this Section 5.4.2, such Class B
Preferred Partnership Interest shall be deemed canceled.
5.4.3 Early Redemption. In the event that the Partnership offers to
----------------
redeem any Preferred Partnership Interests prior to the respective Redemption
Dates referred to above, such offer
23
<PAGE>
shall be made (i) first to the Partners holding the Class B Preferred
Partnership Interests, then (ii) to the Partners holding the Class A Preferred
Partnership Interests on a pro rata basis according to their ownership of such
Class A Preferred Interests
5.4.4 Failure to Redeem.
-----------------
(a) If the Partnership fails to redeem in full the Class
A Preferred Partnership Interests on or prior to the Class A Redemption Date,
then in that event no cash distributions in respect of the Class B Preferred
Partnership Interests shall be made until the Class A Preferred Partnership
Interests have been fully redeemed.
(b) If the Partnership fails to redeem the unconverted
Class B Preferred Partnership Interests on or prior to the Class B Redemption
Date and if the Class A Preferred Partnership Interests have been fully
redeemed, then in that event, no cash distributions other than Minimum Tax
Distributions, shall be made to Partners until the Class B Preferred Partnership
Interests have been fully redeemed.
(c) If the Partnership fails to redeem both the Class A
and the unconverted Class B Preferred Partnership Interests on or prior to their
respective Redemption Dates, then in that event, any distribution in redemption
thereof shall be made to the Partners holding all unredeemed Preferred
Partnership Interests, pro rata based upon each Partner's Unrecovered Capital
plus the accrued but unpaid Preferred Return with respect thereto.
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.
ARTICLE VI
MANAGEMENT
----------
6.1 Board of Directors.
------------------
6.1.1 Authority. The Partners hereby agree that pursuant to Section
---------
17-403 of the Act, the Partnership shall be managed by a committee of the
Partners' representatives elected, designated or otherwise chosen as herein
provided (the "Board of Directors"). The Board of Directors shall constitute a
"committee" for purposes of Section 17-303(b)(7) of the Act. The Board of
Directors shall exercise all of the rights, powers and authority otherwise
vested in a general partner of a Delaware limited partnership formed under the
Act 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 or
desirable to accomplish the purpose of the Partnership with respect to 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
to execute, perform and carry out agreements of any kind necessary to, or in
connection with or convenient or incidental to, the accomplishment of
24
<PAGE>
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. To the fullest extent permitted under the Act, the General
Partner shall have none of the rights and powers of a general partner of a
limited partnership formed under the Act and shall have no right or
responsibility with respect to the management or control of the business or
affairs of the Partnership; provided, however, that if under the Act any right
or power must be exercised by the General Partner in its capacity as a general
partner of the Partnership, or any action must be taken by the General Partner
in such capacity, then the General Partner agrees to exercise such right or
power or to take such action at the direction of the Board of Directors and in
conformity with such direction. The Partners further agree that the rights and
powers vested in the Board of Directors pursuant to this Section 6.1.1 are
vested in the Board of Directors pursuant to paragraph (a) of Section 17-403 of
the Act; provided, however, that to the extent such rights and powers, or any of
them, cannot be vested in the Board of Directors pursuant to paragraph (a) of
Section 17-403 of the Act, then the Partners agree that such rights and powers
have been delegated by the General Partner to the Board of Directors pursuant to
paragraph (c) of Section 17-403 of the Act and, to the fullest extent provided
by law, such delegation shall be irrevocable; provided further that in the
event, notwithstanding the agreement of the Partners to the contrary, the
delegation of any right or power provided herein may be revoked by the General
Partner, the Partners agree that any such revocation will only be effective, if
at all, upon 90 days prior written notice by the General Partner to each other
Partner. 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 following powers are reserved exclusively
to the Board of Directors unless specifically delegated by the Board of
Directors to the Executive Committee or to any Person:
(a) to employ, retain, and terminate a Chairman of the
Board of Directors ("Chairman"), who shall have the authority set forth in
Section 6.3.1 and, subject to the authority of the Chairman, 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.
(b) to elect the Board of Directors of Petro Operating,
which shall be identical to the Board of Directors of the Partnership.
(c) subject to the final review and approval of the
Executive Committee under Section 6.2.1(e), to amend or cancel any agreement
(subject to the provisions of such agreement), between the Partnership and a
Partner or Affiliate of a Partner, or enter into a new agreement between the
Partnership and a Partner or Affiliate of a Partner, provided that the terms of
such agreement are no less favorable than available from unrelated third
parties.
(d) acquire, terminate operations of, and/or dispose of any
real property that is intended to serve, or has been serving, as a truck stop in
the business of the Partnership;
(e) as a franchisor, enter into a franchise agreement with
any Person; or
25
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(f) to adopt the annual budget of the Partnership and to
approve any annual variance from the amount budgeted for capital expenditures;
(g) subject to existing employment agreements and to the
provisions of Section 6.3, to establish the limits of the Partnership's
officers' authority;
(h) to select auditors for the Partnership and to manage
the conduct and settlement of the Partnership's legal proceedings;
(i) subject to Section 6.4, to sell Partnership Interests
to third parties, or to receive additional capital contributions from Partners;
(j) to make distributions to Partners pursuant to Section
5.2;
(k) to disburse other payments as provided for in this
Agreement;
(l) to communicate with the general public, if necessary,
regarding Partnership matters;
(m) 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 a Partnership Interest; and
(n) 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 as described in Section 6.4.
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 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. Subject to paragraph (e) of this Section 6.1.4,
-----------
the Board of Directors shall initially consist of seven (7) persons who shall be
appointed in accordance with the provisions of this Article as follows:
26
<PAGE>
(a) So long as any of the Cardwell Partners own any
Partnership Interests, the Cardwell Partners collectively shall have the right
to appoint two persons to the Board of Directors. The Cardwell Partners hereby
appoint Cardwell Sr. and Cardwell Jr. as initial members of the Board of
Directors.
(b) So long as Mobil or its Affiliates own any Partnership
Interests, Mobil shall have the right to appoint two persons to the Board of
Directors. Mobil hereby appoints K. T. Weir and N. B. Carlson as initial members
of the Board of Directors.
(c) So long as Volvo or its Affiliates own any Partnership
Interests, Volvo shall have the right to appoint two persons to the Board of
Directors. Volvo hereby appoints Robert Grussing IV and Martha P. Boyd as
initial members of the Board of Directors.
(d) The Cardwell Partners, Mobil and Volvo hereby agree
that the seventh member of the Board of Directors shall be Larry J. Zine
("Zine"), and he is hereby appointed to the Board of Directors. Should Zine
resign or be removed as a member of the Board of Directors, his replacement, if
any, shall be elected by unanimous vote of the Cardwell Partners, Mobil and
Volvo.
(e) 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 be automatically removed from the Board of Directors as of the
date such Partner ceased to be entitled to appoint members to be the Board of
Directors.
6.1.5 Term; Vacancies. Each member of the Board of Directors shall
---------------
hold office until death, resignation or removal. If a vacancy occurs on the
Board of Directors, the Partner or Partners that appointed such vacating member
shall appoint such member's successor.
6.1.6 Voting. 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.
6.2 Executive Committee.
-------------------
6.2.1 Authority. The Partnership shall have an executive committee
---------
(the "Executive Committee") of the Board of Directors (which committee shall
also be the Environmental Compliance 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) during the period between meetings of the Board of
Directors, to take action with respect to matters as to which the Board of
Directors has authority to act.
(b) to terminate the employment of the Chairman and Chief
Executive Officer.
27
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(c) to change or adopt any incentive compensation plans for
officers, employees and agents of the Partnership and to determine amounts
payable under such plans.
(d) to approve the initial compensation of the officers of
the Partnership, and to approve any base compensation payable to an employee or
agent of the Partnership that exceeds $100,000 annually for such person.
(e) to approve any transaction (provided that such
transaction is material in the context of the Partnership's overall business)
entered into subsequent to the Effective Date, between the Partnership and a
Partner or a Partner's Affiliate.
(f) acting as the Environmental Compliance Committee, to
document, formulate, implement and oversee the environmental compliance policy
of the Partnership, which activity and responsibility shall be conducted by
unanimous vote of the members of such committee.
(g) to take such other actions as are specifically provided
for in this Agreement.
6.2.2 Composition. The Executive Committee shall consist of three
-----------
persons, appointed as follows:
(a) The Cardwell Partners collectively shall have the right
to appoint one person to the Executive Committee, and they hereby appoint
Cardwell Sr. as their initial representative to that committee.
(b) Mobil shall have the right to appoint one person to the
Executive Committee and Mobil hereby appoints K. T. Weir as its initial
representative to that committee.
(c) Volvo shall have the right to appoint one person to the
Executive Committee, and Volvo hereby appoints Robert Grussing IV as its initial
representative to that committee.
(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.
(e) The membership of the Executive Committee and of the
Executive Committee of Petro Operating shall be identical.
6.2.3 Voting. 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 Officers. The Partnership and Petro Operating shall have the
--------
officers set forth in this Section 6.3 and such additional officers as the
respective Boards of Directors may designate. The officers of the Partnership
and of Petro Operating shall be identical and shall manage the day-to-day
28
<PAGE>
affairs of the Partnership and Petro Operating at the direction of their
respective Boards of Directors or Executive Committees.
6.3.1 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. The Partners hereby
appoint Cardwell Sr. as the initial Chairman, Chief Executive Officer and
President of the Partnership. After consultation with the Board of Directors
and/or the Executive Committee, the Chairman, so long as the Chairman is
Cardwell Sr., shall have the authority to hire, and to terminate the employment
of, any other officer or employee of the Partnership. If Cardwell Sr. is no
longer Chairman, the foregoing authority shall revert to the Board of Directors.
6.3.2 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. In the absence of the Chairman, 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.
6.3.3 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 case of the
incapacity or inability of the Chief Executive Officer to act, the President
shall assume the authority, and shall perform the duties, of the Chief Executive
Officer until such time as the Board of Directors shall determine otherwise
6.3.4 Chief Financial Officer. The Partnership shall have a
-----------------------
Chief Financial Officer who shall serve under the direction of the Chief
Executive Officer.
6.3.5 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.
6.3.6 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 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.
29
<PAGE>
6.3.7 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.
6.4 Major Decisions.
---------------
6.4.1 In General. The Partnership shall not take any of the
----------
following actions ("Major Decisions") without the consent of all Partners having
Partner Veto Rights:
(a) Permit the tax matters partner to take any
position or make any decision that could materially adversely affect the
Partnership or any Partner;
(b) In accordance with Section 8.1, amend this
Agreement;
(c) Amend, or consent to the amendment of, the Limited
Partnership Agreement of Petro Operating;
(d) In accordance with, and subject to, Section 9.4,
admit any new Limited Partner to the Partnership; and
(e) Request the holders of Common Partnership
Interests to make additional Capital Contributions, or to sell additional
Partnership Interests to third parties.
6.4.2 Partner Veto Rights. So long as they are Partners, the
-------------------
Cardwell Partners, Mobil, and Volvo shall have the right to veto ("Partner Veto
Rights") any of the Major Decisions set forth in Section 6.4.1.
6.4.3 Additional Limitations on Actions of the Partnership.
----------------------------------------------------
(a) So long as Mobil (or its Affiliates) is a Partner,
the Partnership shall take no action related to Petro Operating's motor fuels,
lubricants and convenience store marketing strategy that is (in Mobil's
reasonable opinion) a material adverse change to Mobil or its Affiliates,
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 Partnership and Petro Operating's
standards.
(b) So long as Volvo (or its Affiliates) is a Partner,
the Partnership shall take no action related to Petro Operating's retail
marketing strategy that would (in Volvo's reasonable opinion) have a material
adverse effect on Volvo's brand image or on its truck sales and service
operations.
30
<PAGE>
6.4.4 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.
6.5 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 and any act or failure to act by the Partnership or any other
matter whatsoever involving the Partnership or any Partner.
6.6 Meetings and Approval Requirements of Board of Directors and
------------------------------------------------------------
Committees.
- ----------
6.6.1 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.
6.6.2 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.
6.6.3 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.
6.6.4 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 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.
6.6.5 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, Mobil and Volvo (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.
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<PAGE>
6.6.6 Approval Requirements. Subject to Section 6.4.1 (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.
6.6.7 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.
ARTICLE VII
INDEMNIFICATION
---------------
7.1 General.
-------
(a) No current or former Partner of the Partnership or of
Petro Operating, nor any of the shareholders, partners, officers, directors,
members, managers, employees and/or agents of such Partner and/or of such
Partner's Affiliates, including the tax matters partner, each member of the
Board of Directors of the Partnership and of Petro Operating and each committee
thereof, the officers of the Partnership and of Petro Operating, and the
shareholders, officers, and directors of Warrant Holdings which serve in any of
those positions at the request of the Partners or of the Board of Directors of
the Partnership or of Petro Operating (individually, an "Exculpated Party"),
shall be liable, responsible or accountable in damages or otherwise (i) to the
Partnership, (ii) to any Partner (including Warrant Holdings, its officers,
directors, and/or security holders), or (iii) to any Affiliate of a 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 attorney's fees) ("Indemnified Loss") 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 Exculpated Party
to be within the scope of the authority granted to such Exculpated Party by this
Agreement, the Board of Directors, or otherwise; and (c) in a manner not
constituting willful misconduct, fraud, breach of such Exculpated Party's
fiduciary duty of loyalty, or gross negligence.
(b) 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 attorney's
fees and 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.
32
<PAGE>
(c) With respect to the foregoing, the Partners hereby
specifically agree that any Partner or Affiliate of any Partner who may serve as
an officer, director, and/or shareholder of Warrant Holdings is doing so at the
request of, and as an accommodation to, the Partnership and to the Partners and
their Affiliates and in furtherance of Partnership business. Accordingly, any
such Person serving as an officer, director, and/or shareholder of Warrant
Holdings shall be deemed to be an Exculpated Party entitled to the full
protections afforded an Exculpated Party or Indemnified Person under the
provisions of this Article VII.
7.2 Indemnification Procedures. The provisions of this Section 7.2
--------------------------
shall apply to any indemnification by the Partnership, including any
indemnification of an Exculpated Party.
7.2.1 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 entitled to be indemnified or held
harmless under this Agreement (an "Indemnified Person"), the Indemnified Person
shall notify the Partnership in writing of the Indemnified Loss or the assertion
of claim or commencement of action.
7.2.2 Reimbursement. In the case of an Indemnified Loss not
-------------
involving an assertion of claim or commencement of action by any third party,
the Partnership 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.
7.2.3 Defense by Partnership. 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 Partnership in writing
of such assertion or commencement. Subject to Section 7.2.4 below, the
Partnership shall, at its expense, assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Person, in which event the
Partnership 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.
7.2.4 Defense by Indemnified Person. If the Partnership fails to
-----------------------------
diligently promptly defend or settle the claim or action after notice, which
failure continues for more than thirty (30) days after such notice, then in that
event the Indemnified Person shall have the right to defend, at the sole cost
and expense of the Partnership, the claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified
Person to a final conclusion or settled. In such event, the Indemnified Person
shall have full control of such defense and proceedings, provided, however, that
without the Partnership's 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 Partnership is obligated to
33
<PAGE>
indemnify such Indemnified Person, the Indemnified Person shall inform the
Partnership of the proposed settlement terms and if the Partnership is 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
Partnership must provide to the Indemnified Person with respect to such claim
shall be the amount of such bona fide offer of settlement the Partnership was
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 Partnership
shall, at its sole cost and expense, 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.
7.2.5 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
Partnership in writing, (ii) Section 7.2.4 above shall be applicable, or (iii)
the named parties to such action (including any impleaded parties) include both
the Partnership 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 Partnership. In the event any of the conditions set forth in
this Section 7.2.5 are met, the Partnership shall not have the right to assume
the defense of such action on behalf of the Indemnified 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 Section 7.2.5 are met, the Indemnified
Person shall have the right to select such Person's counsel, which counsel must
be reasonably satisfactory to the Partnership.
7.2.6 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
Partnership will be liable in accordance with its indemnity under this Agreement
shall give rise to liability of the Partnership unless the Partnership 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 Partnership 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.
7.2.7 Insurance. The liability of the Partnership 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
34
<PAGE>
other third party, and it shall be the obligation of, and at the sole expense
of, the Partnership to pursue any remedies that may be available from any third
party to reduce the amount otherwise payable by the Partnership and the
Indemnified Person shall use reasonable efforts to assist and cooperate with the
Partnership (at the expense of the Partnership) in pursuing such remedies. So
long as the Partnership shall be diligently pursuing remedies against any such
third party, which remedies counsel for the Partnership (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
Partnership 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 the loss of interest or the cost of
funds, as applicable) by the Partnership, the Partnership may defer payment of
amounts which they would otherwise be obligated to pay hereunder to the extent
that such third party may be liable therefor. If in the opinion of the
Indemnified Person, the Indemnified Person has remedies available to it against
third parties and the Partnership does not have such remedies available to it
against the same third parties, then at the option of the Partnership, the
Indemnified Person shall, at the sole cost of the Partnership, exhaust available
remedies against any such third party; provided, however, that the Partnership
shall use all reasonable efforts to assist and cooperate with the Indemnified
Person (at the expense of the Partnership) in pursuing such remedies; and
provided further, however, that the Partnership 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 Partnership.
7.3 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. This Agreement may be amended if such amendment is
----------
approved by the Partners having Partner Veto Rights; 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 of
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 shall amend and revise Schedule A to this Agreement to
properly reflect any changes required to be reflected thereon by this Agreement.
ARTICLE IX
ADMISSIONS, EXITS AND TRANSFERS
-------------------------------
35
<PAGE>
9.1 Restriction on Transfers by Partners.
------------------------------------
9.1.1 Generally. 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 Agreement.
9.1.2 Warrant Holdings. In addition to the general restriction on the
----------------
Transfer of Partnership Interests set forth in Section 9.1.1, it is specifically
understood and agreed among the Partners, including Warrant Holdings, that under
no circumstances whatever shall the owners of securities issued by Warrant
Holdings (including, without limitation, warrants and common stock) become
Partners or have any other direct ownership interest in a Partnership Interest
as a result of being a security holder in Warrant Holdings. In addition:
(a) Warrant Holdings shall have no rights to Transfer all or
any portion of its Common Partnership Interest except pursuant to the provisions
of Sections 9.5, 9.6, 9.7 and 12.2(a)(ii), as such limited transfer rights are
more particularly set forth in that certain Registration Rights and Partners'
Agreement to be dated as of July 23, 1999 (the "Transfer Rights Agreement")
among the Partnership, the Partners (including Warrant Holdings), Sixty Eighty,
LLC, a Delaware limited liability company ("Sixty Eighty") and the sole initial
shareholder of Warrant Holdings, First Union Capital Markets Corp. ("First
Union") and CIBC World Markets Corp. ("CIBC"). In addition, Warrant Holdings may
be required to Transfer all or a portion of its Common Partnership Interests
pursuant to Sections 9.5, 9.6, 9.7 and/or Section 12.2(a)(i) and as more
particularly set forth in the Transfer Rights Agreement. In the event of a
conflict between the terms of this Agreement and the terms of the Transfer
Rights Agreement, the terms of the Transfer Rights Agreement shall control.
(b) The Partnership is a party to that certain Warrant
Agreement to be dated July 23, 1999, among the Partnership, Warrant Holdings,
Sixty Eighty, First Union and CIBC (the "Warrant Agreement") pursuant to which
the Partnership may be required to purchase warrants issued by Warrant Holdings.
The Partners acknowledge and agree that the Warrant Agreement is a valid and
binding agreement of the Partnership, and in the event of a conflict between the
terms ot this Agreement and the terms of the Warrant Agreement, the terms of the
Warrant Agreement shall control.
9.2 Transfers in Contravention. Any Transfer (or purported Transfer) of
--------------------------
any Partnership Interests in contravention of any of the provisions of this
Agreement shall be null and void and shall not bind, or be recognized by, the
Partnership. To the fullest extent permitted by law, any Partner attempting to
Transfer a Partnership Interest in contravention of any of the provisions of
this Agreement 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.
9.3 Transfers to Affiliates. Any of the Cardwell Partners, Mobil, and
-----------------------
Volvo (the "Transferring Partner") shall have the absolute right to Transfer all
or part of its Partnership Interests to a majority beneficially owned Affiliate,
to an Affiliate which owns a majority of such Transferring Partner, or to an
Immediate Family Member of such Transferring Partner, provided,
36
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however, that the voting rights of such Partners shall not be transferred upon
Transfer of such Partnership Interest to an Immediate Family Member and shall be
retained by the Transferring Partner unless such Immediate Family Member is
admitted to the Partnership in accordance with Section 9.4.
9.4 Admission of Limited Partners. New Limited Partners may be admitted to
-----------------------------
the Partnership only upon the unanimous consent of the Partners having Partner
Veto Rights.
9.4.1 An Affiliate. The Partners having Partner Veto Rights agree
------------
that they will admit as a new Limited Partner any Affiliate of a Partner who
receives a Partnership Interest from a Partner pursuant to the provisions of
Section 9.3.1 and who agrees to be bound by the terms of this Agreement, if such
Affiliate is not engaged in the business of selling or servicing trucks in
competition with Volvo or in the business of marketing fuel or lubricants in
competition with Mobil or its Affiliates.
9.4.2 Other Admissions. Upon the consent of Partners having Partner
----------------
Veto Rights, which consent shall not be unreasonably withheld, such Partners
will admit as a new Limited Partner any Person who shall (i) purchase newly
issued Partnership Interests, or Partnership Interests owned by (y) a Selling
Partner pursuant to the provisions of Section 9.5 or (z) by the Cardwell
Partners pursuant to Section 9.7.2, and (ii) agree to be bound by all of the
terms of this Agreement. For purposes of this Section 9.4.2, the withholding of
consent by the Partners having Partner Veto Rights shall not be unreasonable if
such withholding of consent is based upon the reasonable opinion of either Mobil
or Volvo that the admission of a new Limited Partner would have a material
adverse effect on either of Mobil's (or an Affiliate of Mobil's) or Volvo's
retail brand image, upon Mobil's (or an Affiliate of Mobil's) marketing,
refining, production or distribution of motor fuels or lubricants, upon Volvo's
competitive truck sales and service, or upon the reasonable likelihood that such
new Limited Partner would have a detrimental effect on the business of the
Partnership or of Petro Operating.
9.5 General Right of First Refusal.
------------------------------
9.5.1 Warrant Holdings. Warrant Holdings does not have the right
----------------
under the terms of this Agreement or under the terms of the Transfer Rights
Agreement to initiate the sale, assignment, or other transfer of all or a
portion of its Common Partnership Interest or to purchase all or any portion of
a Partnership Interest. The right and/or obligation (if any) of Warrant Holdings
to participate in the sale of its Common Partnership Interest under this Section
9.5 is governed by the terms and provisions of the Transfer Rights Agreement.
9.5.2 Proposed Transfer. Subject to the terms of this Agreement (and
-----------------
excepting a Transfer pursuant to Sections 9.3, 9.6, and 9.7), any of the
Cardwell Partners, Mobil, or Volvo desiring to Transfer all or any portion of
the Partnership Interests owned by such Partner must follow the procedures set
forth in this Section 9.5 and in the Transfer Rights Agreement. If any such
Partner (the "Selling Partner") desires to Transfer all or any part of the
Partnership Interests owned by such Partner, the Selling Partner first shall
deliver a written notice (the "Transfer Notice") to the Partnership and to the
other Partners (including to the Board of Directors of Warrant Holdings),
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which Transfer Notice shall include all agreements, schedules and documents
relating to the proposed Transfer. The Transfer Notice shall name the proposed
transferee, 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.
9.5.3 Partnership Option Period. For ninety (90) 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.
9.5.4 Partner Option Period. In the event the Partnership does
---------------------
not elect to acquire all of the Partnership Interests specified in the Transfer
Notice, the Cardwell Partners, Mobil, and Volvo (but not Warrant Holdings) shall
have the option of purchasing some or all of such available Partnership
Interests during the thirty (30) Business Day period immediately following the
Partnership Option Period (the "Partner Option Period") at the price and upon
the terms set forth in the Transfer Notice. A Partner electing to purchase such
Partnership Interests (the "Buying Partner" or "Buying Partners") shall, within
the Partner Option Period, deliver a written notice to the Partnership and the
Selling Partner specifying the portion of the available Partnership Interests
such Buying Partner desires to purchase. In the event the available Partnership
Interests are oversubscribed, the available Partnership Interests shall be
allocated among the Buying Partners on a pro rata basis in accordance with the
percentage which each Buying Partner's Partnership Interest bears to the
Partnership Interests of all of the Buying Partners.
9.5.5 Closing. In the event the Partnership and/or the Partners
-------
elect to purchase all of the Partnership Interests as specified in the Transfer
Notice, settlement for such Partnership Interests shall be consummated within
sixty (60) days after the date of such election, 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 9.5.2. Any
Partnership Interests acquired by the Partnership in accordance with this
Section 9.5 shall be deemed to have been redeemed and canceled and Schedule A
shall be amended accordingly.
9.5.6 Applicability of Restrictions. 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
within the 180-day period following the expiration of the Partner Option Period,
sell such uncommitted 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 this Section 9.5 shall
again apply to such Partnership Interests.
9.6 Cardwell Buy-Sell.
-----------------
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9.6.1 Notice of Cardwell Buy-Sell.
---------------------------
(a) Subject to the provisions of Sections 9.6.1(b) and
9.6.1.(d) below, the Cardwell Partners may, at any time, give written notice
(the "Cardwell Buy-Sell Notice") to each of the members of the Board of
Directors appointed by Mobil and Volvo and to the Board of Directors of Warrant
Holdings stating that the Cardwell Partners desire to exercise their rights
under this Section 9.6 to sell to, or to purchase from, each of Mobil and Volvo,
all the Partnership Interests owned by such Partners, their Affiliates, and
Passive Investors (such interests collectively, the "Entire Interests"). 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.
(b) For purposes of determining a purchase price for the
Partnership Interests under this Section 9.6, the Cardwell Buy-Sell Notice shall
specify an amount that the Cardwell Partners designate to be the gross fair
market value of all of the combined assets of the Partnership and Petro
Operating as a going concern, and the purchase price shall be determined
pursuant to Section 9.6.5.
(c) In any proposed sale of Partnership Interests under
this Section 9.6, Warrant Holdings shall have the option to sell its Common
Partnership Interests pursuant to the terms of the Transfer Rights Agreement
(together with the Cardwell Partners pursuant to Section 9.6.3 or along with
Mobil and Volvo pursuant to Section 9.6.4) at the same pro rata Purchase Price,
in which event (and for purposes of this Section 9.6), the Warrant Holdings
Common Partnership Interests shall be deemed a part of the Selling Partners'
Entire Interests. In addition, any employee of the Partnership or of Petro
Operating who owns Partnership Interests ("Employee Interests") shall have the
option to sell those Partnership Interests at the same pro rata Purchase Price
and on the same terms as set forth above, in which event the Employee Interests
will be deemed to be a part of the Selling Partner's Entire Interest.
(d) In the event of the death of Cardwell Sr., the
Cardwell Partners will not be able to exercise the Cardwell Buy-Sell procedures
under this Section 9.6 until the later of (i) three years from the date of this
Agreement or (ii) one year from the date of Cardwell Sr.'s death.
9.6.2 Response.
--------
(a) Should Cardwell Sr. be terminated as Chairman or
Chief Executive Officer of the Partnership, and thereafter give the Cardwell
Buy-Sell Notice, then in that event, each of Mobil and Volvo shall have thirty
(30) days after receipt of the Cardwell Buy-Sell Notice to elect by written
notice to the Cardwell Partners (i) to buy the Cardwell Partners' Entire
Interests (the "Buy Option") or (ii) to sell to the Cardwell Partners the Entire
Interests of Mobil or Volvo, as applicable (the "Sell Option"). Each of Mobil
and Volvo shall notify the Cardwell Partners and each other of its election
within the thirty (30) day period. If either Mobil or Volvo fails to respond to
the Cardwell Buy-Sell Notice within the thirty (30) day period, the party which
failed to respond shall be deemed to have elected the Sell Option.
39
<PAGE>
(b) In all other circumstances where the Cardwell
Partners initiate the Cardwell Buy-Sell Notice, Mobil and Volvo shall each have
sixty (60) days after receipt of the Cardwell Buy-Sell Notice to respond as set
forth above, and if no response is received by the Cardwell Partners from Mobil
or Volvo within the specified sixty (60) day period, such failure to respond
shall be deemed to be an election by Mobil and Volvo, as appropriate, of the
Sell Option.
(c) If (i) the Buy Option is properly exercised by
either Mobil or Volvo for the Entire Interests of the Cardwell Partners, (ii)
the Sell Option is properly exercised by both Mobil and Volvo with respect to
the Entire Interests of Mobil and Volvo, or (iii) the Sell Option with respect
to the Entire Interests of Mobil and Volvo is deemed to be exercised as provided
above, then the Partners shall buy and sell their respective Entire Interests in
accordance with the provisions of this Section 9.6.
9.6.3 Buy Option.
----------
(a) If only one of Mobil and Volvo elects the Buy Option
(and thereby becomes a "Buying Partner") then such Buying Partner shall be
obligated to purchase the Entire Interests of the Cardwell Partners in
accordance with this Section 9.6, but shall have no obligation to purchase any
Interests of the Partner that has elected, or has been deemed to have elected,
the Sell Option, and such Sell Option shall be deemed canceled and of no force
and effect.
(b) If both Mobil and Volvo elect the Buy Option, then
in that event, each of Mobil and Volvo shall, in the absence of a contrary
agreement between them, be obligated to purchase that proportion of the Cardwell
Partners' Entire Interests as such Buying Partner's Partnership Interest bears
to the Partnership Interests of all of the Buying Partners.
9.6.4 Sell Option. If both Mobil and Volvo elect the Sell Option
-----------
(or are deemed to have selected the Sell Option and thereby became "Selling
Partners"), 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 Partnership
Interest bears to the Partnership Interests of all of the Cardwell Partners. 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
Partnership Interest of all of the Cardwell Partners.
9.6.5 Purchase Price. The purchase price of a Selling Partner's
--------------
Entire Interests shall equal the net amount which the Selling Partners would
receive if the combined assets of the Partnership and Petro Operating were sold
for their gross fair market value specified in the Cardwell Buy-Sell Notice with
the liabilities of the Partnership and Petro Operating liquidated and paid, and
the net proceeds distributed to the Partners in accordance with Section 10.3.2.
For purposes of applying this Section 9.6, 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
40
<PAGE>
notice, and the Partners' Capital Accounts adjusted accordingly. The Executive
Committee shall make the calculations necessary to determine the purchase price.
9.6.6 Closing; Payment.
----------------
(a) The closing shall be held at the principal office of
the Partnership on a business day selected by the Buying Partner or 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 the Sell Option
is deemed to be exercised.
(b) The terms of the purchase and sale shall be
unconditional, except that each Selling Partner 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 free of claims, liens, encumbrances, options, warrants or rights of
third parties.
(c) At the closing, each Selling Partner shall deliver
an instrument confirming such representation' and warranties. In addition, at
the closing, the following events shall occur: (i) each Buying Partner shall
deliver an amount equal to the purchase price determined under Section 9.6.5 in
immediately available funds, to the Selling Partners; (ii) each Selling Partner
shall deliver to the Buying Partners assignments of their Entire Interests being
sold without any warranty other than as set forth above; and (iii) each Buying
Partner shall, in addition to the purchase price determined under Section 9.6.5,
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.
9.6.7 Failure to Perform.
------------------
(a) 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 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.
(b) Notwithstanding any other provision of this Section
9.6, if a Buying 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 Buying 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 9.6.5 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.
(c) If the Selling Partners elect to pursue the Buy
Option under Section 9.6.7(b), then, in that event, the purchase pursuant
thereto shall be such Selling Partner's sole and
41
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exclusive remedy for such failure. If the Selling Partners do not elect to
pursue the Buy Option, then, in that event, they may pursue any other rights
they may have in equity or at law.
9.7 Sale, Merger, Consolidation. Upon written notice to the Board of
---------------------------
Directors, and subject to the provisions of Section 9.7.2, Cardwell Sr. may
solicit the sale of all of the Partnership Interests or all of the assets or
combined business of the Partnership and Petro Operating as a going concern, or
the merger, consolidation, combination, exchange or other transaction involving
all of the Partnership Interests or all of the combined business and assets of
the Partnership and Petro Operating (a "Global Transaction"). No other Partner
shall solicit an offer for a Global Transaction without the prior written
consent of the Board of Directors.
9.7.1 Notice of Global Offer. Upon receipt by any of the
----------------------
Partners or of the Partnership of a definitive written, bona fide offer from an
unrelated third party involving a Global Transaction (a "Global Offer"), such
Global Offer shall be presented to all of the Partners.
9.7.2 Acceptance of Global Offer. The provisions of this Section
--------------------------
9.7 shall be effective on January 1, 2002, or, in the event Cardwell Sr. is
terminated as Chairman or Chief Executive Officer of the Partnership for any
reason other than "cause" (as that term is defined in the Employment Agreement
----------
between Cardwell Sr. and Petro Operating and dated February 10, 1999), then upon
such earlier date. The specific rights and obligations of Warrant Holdings to
participate in the sale of its Common Partnership Interest under this Section
9.7 are governed by the terms and provisions of the Transfer Rights Agreement.
(a) If the Cardwell Partners desire to accept a Global
Offer, they shall notify the Partnership and the other Partners (including the
Board of Directors of Warrant Holdings) in writing to that effect (the "Cardwell
Acceptance Notice"), in which case each of Mobil and Volvo shall have sixty (60)
days after receipt of the Cardwell Acceptance Notice to elect by written notice
to the Cardwell Partners (i) to participate with the Cardwell Partners (in which
event Warrant Holdings may be obligated to sell its Common Partnership Interest
as set forth in the Transfer Rights Agreement) in the Global Offer on a pro rata
basis according to their Partnership Interests and upon the terms and conditions
specified in the Global Offer, (ii) to sell their Partnership Interests to the
Cardwell Partners (in which event Warrant Holdings may be obligated to sell its
Common Partnership Interest as set forth in the Transfer Rights Agreement) upon
the same terms specified in the Global Offer, provided, however, that the sale
of the Mobil and Volvo Partnership interests pursuant to the provisions of this
Section 9.7.2 shall close on the same day, but immediately prior to the closing
of the Global Transaction, or (iii) to buy all of the Partnership Interests
owned by the Cardwell Partners, plus any Employee Interests (as described in
Section 9.6.1(c)) and the Warrant Holdings Common Partnership Interest (if
Warrant Holdings is required or chooses to sell to Mobil and Volvo as set forth
in the Transfer Rights Agreement) (the "Cardwell Entire Interest") on the same
terms and conditions as set forth in the Global Offer (the "Buy Option").
(b) If either of Mobil or Volvo elects the Buy Option
or should either of Mobil or Volvo fail to make an election as required
hereunder, then in either event each of Mobil and Volvo (the "Buying Partners")
shall, in absence of a contrary agreement between them, be obligated to purchase
that proportion of the Cardwell's Partners' Entire Interest (the "Selling
42
<PAGE>
Partners") as each of Mobil's and Volvo's Partnership Interest bears to the
total of Mobil and Volvo's Partnership Interests.
9.7.3 Closing; Payment.
----------------
(a) The closing of a sale of the Cardwell Partners'
Entire Interest to Mobil and Volvo shall be held at the principal office of the
Partnership on a business day selected by the Buying Partner or Partners, which
day shall not be less than thirty (30) or more than one hundred twenty (120)
days after the Buy Option is properly exercised or the Buy Option is deemed to
be exercised.
(b) The terms of the purchase and sale shall be
unconditional, except that each Selling Partner 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 free of claims, liens, encumbrances, options, warrants or rights of
third parties.
(c) At the closing, each Selling Partner shall deliver
an instrument confirming such representations and warranties. In addition, at
the closing, the following events shall occur: (i) each Buying Partner shall
deliver an amount equal its share of the purchase price determined under Section
9.7.2 in immediately available funds, to the Selling Partners; (ii) each Selling
Partner shall deliver to the Buying Partners assignments of their Entire
Interests being sold without any warranty other than as set forth above; and
(iii) each Buying Partner shall, in addition to the purchase price determined
under Section 9.7.2, 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.
9.8 Rights Upon Transfer. Any Partner that has Transferred all or any
--------------------
portion of its Partnership Interest in accordance with this Agreement shall
execute, deliver and perform all such other agreements, documents, instruments
and other writings as are customary in such transactions or 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.
9.9 Change of Control Restriction. The Partners acknowledge that the
-----------------------------
Indentures relating to Petro Operating's 12 1/2% Senior Notes due 2002 and 10
1/2% Senior Notes due 2007, the Partnership's 15% Senior Discount Notes due
2008, and the Amended and Restated Credit Agreement contain so-called "Change of
Control" provisions which, if triggered, would create an event of default under
those documents. The Partners therefore agree that, notwithstanding any
provision of
43
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this Agreement to the contrary, except in the event of a transaction pursuant to
Section 9.13 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 (other than payments in kind on Preferred Partnership
Interests), 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.
9.10 Pledge of Partnership Interests. Any Partner (other than Warrant
-------------------------------
Holdings) may pledge its Partnership Interests, provided, however, that the
pledgee of such Partnership Interest shall in all respects be bound by all of
the provisions of this Agreement.
9.11 Rights of Unadmitted Assignees. Subject to Sections 9.3 and 9.4,
------------------------------
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): (i) shall not be admitted as a
substituted Limited Partner, (ii) shall be entitled only to allocations and
distributions with respect to such Partnership Interest in accordance with this
Agreement, (iii) shall have no right to any information or, to the fullest
extent permitted by law, to an accounting of the affairs of the Partnership,
(iv) shall not be entitled to inspect the books or records of the Partnership,
and (v) shall not have any of the rights of a Partner under the Act or this
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.
9.12 Distributions and Allocations in Respect to Transferred
-------------------------------------------------------
Interests. If any Partnership Interest is Transferred (which, for purposes of
- ---------
this Section 9.12, 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.
9.13 Termination of the Partnership. Except for Transfers of
------------------------------
Partnership Interests specifically permitted under Sections 9.6 and 9.7 or
pursuant to an IPO Incorporation pursuant to the provisions of Article XII, 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
44
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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"):
10.2.1 Expiration. Expiration of the term of Partnership set
----------
forth in Section 2.5;
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 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
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
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Limited Partnership has been canceled 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 as follows:
(a) first, pro rata with respect to any accrued and
unpaid Class A Preferred Return and Class B Preferred Return;
(b) next, pro rata with respect to the Partners'
Unrecovered Capital attributable to the Class A Partnership Interests and Class
B Partnership Interests;
(c) next, pro rata with respect to the Partners'
Aggregate Distribution Shortfalls;
(d) next, pro rata with respect to the Partners'
Unrecovered Capital attributable to the Common Partnership Interests; and
(e) lastly, pro rata in accordance with the Partners'
positive Capital Account balances.
Any liquidating distributions to be made under this Section 10.3.2 may (in
the discretion of the Executive Committee) be made in cash or in Partnership
property on the basis of the Fair Market Value of such Partnership property.
ARTICLE XI
NON-COMPETITION AGREEMENT
-------------------------
11.1 Covenant Not to Compete. The provisions of this Section 11.1 are
-----------------------
separately bargained for commitments among the Partners.
11.1.1 Cardwell. For so long as any of the Cardwell Partners
--------
or any of their Affiliates continues as a Partner, or as a shareholder, partner
or Affiliate of any Partner in the Partnership, or holds directly or indirectly
any Partnership Interest, 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, each of the Cardwell Partners shall take such
action as shall be required to ensure that neither they nor their Affiliates
shall (unless acting as an agent,
46
<PAGE>
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 truck
stop or travel center within one hundred (100) miles in either direction on the
same (primary) interstate highway of any truck stopping center or business
location in which the Partnership or Petro Operating conducted business during
such Partner's association with the Partnership, in competition with the
development and operation of truck stopping centers by the Partnership or by
Petro Operating, or (ii) solicit any customer, employee, vendor, supplier or
business contact of the Partnership or Petro Operating regarding matters
relating to the truck stop or travel center business of the Partnership or Petro
Operating, or (iii) solicit any officer or employee of the Partnership or Petro
Operating unless such officer or employee has been terminated by the Partnership
or Petro Operating unilaterally and without cause. Notwithstanding the
foregoing: Cardwell Sr. and/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 Petro Stopping Center franchises.
11.1.2 Mobil and Volvo. For so long as Mobil and Volvo or any of
---------------
their Affiliates owns any Partnership Interests and thereafter during the Non-
Compete Period, neither such Partner, nor any of its Affiliates, shall directly
purchase or own any Truck Stop Chain (for purposes of this Article XI, defined
as ten or more truck stops in three or more states); provided, however, that no
such Partner, nor any of 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, provided that (i) the principal business (i.e., based on gross revenue)
of the other entity is not a Truck Stop Chain and, (ii) adequate measures are
put in place to protect the confidentiality and non-use of non-public Petro
information (which measures shall include but shall not be limited to (a)
internal corporate "Chinese Walls" such that employees of the applicable Partner
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 and Executive
Committee representatives of such Partner would not, if so requested by the
other members of the Board of Directors or Executive Committee, participate in
any strategic decision concerning Partnership business to the extent the
competing Truck Stop Chain's business is competitive with the Partnership
business).
11.1.3 No Solicitation. No Partner, nor any Affiliate of such
---------------
Partner shall, for so long as such Partner owns any Partnership Interests and
for two years thereafter, solicit any employee of the Partnership or of Petro
Operating unless such employee has been terminated by the Partnership
unilaterally and without cause.
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
47
<PAGE>
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, or any Affiliate of any Partner, from owning
less than a five percent (5%) ownership interest in any competitor which is a
publicly held corporation.
ARTICLE XII
INITIAL PUBLIC OFFERING
-----------------------
12.1 Cardwell Partners Demand. The Cardwell Partners may at any time, and
------------------------
solely for the purpose of effecting an initial public offering ("IPO") of the
Corporation's stock to be registered under the Securities Act (the "IPO
Incorporation"), file a request in writing (the "IPO 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").
12.1.1 Opinion. The IPO Request shall be accompanied by a letter from
-------
a nationally recognized investment banking firm selected by the Cardwell
Partners and 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 the Corporation, (e.g., the number of shares of common stock and
preferred stock, if any, 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) 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.
12.1.2 Plan. The IPO Request shall also be accompanied by a proposed
----
Plan of Reorganization ("Plan") which shall contain such terms as the Cardwell
Partners shall reasonably determine to be appropriate, including (a) the basis
upon which the Common Partnership Interests of each Partner (assuming conversion
of the Class B Preferred Partnership Interest) will be converted into shares of
common stock of the Corporation ("Common Stock"), without regard to voting and
other differences in rights among classes of Common Partnership Interests, and
(b) the basis upon
48
<PAGE>
which the Preferred Partnership Interests will be converted into (i) shares of
Common Stock or (ii) 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 with respect thereto 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. 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, but not the obligation,
to participate in the public offering pro rata to the number of shares of Common
Stock to be received by them pursuant to the Plan, provided that 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.
12.2 Rights of Mobil and Volvo.
-------------------------
12.2.1 Response. Upon receipt of the IPO Request, (i) Mobil
--------
and Volvo together may agree to the proposed IPO as set forth in Section 12.1,
in which case Warrant Holdings (or its shareholders or warrant holders) will
participate in the proposed IPO on a pro rata basis with the other Partners and
in accordance with the terms and provisions of the Transfer Rights Agreement, or
(ii) either or both of Mobil and Volvo shall elect to buy all of the Partnership
Interests of the Cardwell Partners, their Affiliates, and Passive Investors,
and, at the election of the Employees and of Warrant Holdings (pursuant to the
terms of the Transfer Rights Agreement) their respective Partnership Interests
(together the "Entire Cardwell Interests"). Within sixty (60) days of receiving
the IPO Request, Mobil and Volvo shall give written notice (the "Section 12.2
Notice") to the Cardwell Partners specifying either (i) that Mobil and Volvo
have agreed to the Plan, or (ii) that Mobil and/or Volvo will purchase the
Entire Cardwell Interests pursuant to the provisions of Section 12.3.
12.2.2 Failure to Respond. An intentional failure or refusal
------------------
by Mobil or Volvo to respond to the IPO Request shall be deemed to be an
election by the refusing or non-responding party (or parties) to purchase the
Entire Cardwell Interests at the middle of the price range set forth in Section
12.1.1(c) as such price shall be applied to the Entire Cardwell Interests.
12.3 Purchase.
--------
(a) The purchase of the Entire Cardwell Interests by
Mobil and/or Volvo shall close within one hundred eighty (180) days after the
date of the Section 12.2 Notice. The purchase price for the Entire Cardwell
Interests (the "Cardwell Purchase Price") shall be paid by Mobil and/or Volvo in
cash at closing against delivery of such documents of transfer as Mobil and/or
Volvo may reasonably request to transfer the Entire Cardwell Interests free and
clear of all liens, claims, encumbrances and rights of third parties. If Mobil
and Volvo are both purchasing a portion of the Entire Cardwell Interests, then
each of Mobil and Volvo shall, in the absence of a contrary agreement between
them, be obligated to purchase that proportion of the Entire Cardwell Interests
as that Partner's Partnership Interest bears to the combined Partnership
Interests of Mobil and Volvo.
49
<PAGE>
(b) In the event of a purchase of the Entire Cardwell
Interests required under Section 12.2.2, the Cardwell Purchase Price shall be as
set forth in that Section.
(c) In the event of a purchase of the Entire Cardwell
Interests under Section 12.2.1, the Cardwell Purchase Price shall be (i) as
mutually agreed upon among the Cardwell Partners, and the Partner or Partners
which are purchasing the Entire Cardwell Interests, or (ii) if no such
agreement, the Cardwell Purchase Price shall be the average of three prices
submitted by three separate, nationally recognized and reputable investment
banking firms retained by each of the Cardwell Partners, Mobil and Volvo to
value the Entire Cardwell Interests. Each such investment banking firm will
determine a Cardwell Purchase Price following the protocols set forth in Section
9.6.5 and 12.1.1 and accompanied by a written opinion to that effect by such
investment banker, providing, however, that such Cardwell Purchase Price will
not be less than the minimum Cardwell Purchase Price set forth in Section
12.3.2.
(d) The failure of either Mobil or Volvo to retain an
investment banking firm to value the Entire Cardwell Interests hereunder, shall
obligate the Partner to purchase the Entire Cardwell Interests at the Cardwell
Purchase Price determined by the investment banker retained by the Cardwell
Partners.
(e) All expenses reasonably incurred by any of the Partners
in respect of the Plan and the other matters described in this Section 12.3
shall be paid or reimbursed by the Partnership. The Partnership shall pay all
direct and indirect transfer taxes associated with the purchase and sale.
12.4 Assistance. The Partnership shall provide the Partners, their
----------
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 the IPO and related 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.
12.5 Minimum Cardwell Purchase Price. The Cardwell Purchase Price
-------------------------------
shall not be less than the net amount which the Cardwell Partners would receive
for the Entire Cardwell Interests if the combined assets of the Partnership and
Petro Operating were sold for their gross fair market values as of the date of
the proposed Public Offering, the liabilities of the Partnership paid, and the
net proceeds distributed in accordance with Section 10.3.2.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Amended and Restated Credit Agreement. The Partners acknowledge
-------------------------------------
and agree that the Partnership will guarantee the debt of Petro Operating
incurred pursuant to the Amended and Restated Credit Agreement and, pursuant
thereto, the Partnership will pledge to BankBoston, N.A. all of the limited
partnership interests owned by the Partnership in Petro Operating.
50
<PAGE>
13.2 Confidential Information. 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 Limited Partners any confidential information concerning
the Partnership; provided that the Limited Partners maintain the confidentiality
thereof.
13.3 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.
13.4 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.
13.5 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.
13.6 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.
13.7 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 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.
13.8 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.
13.9 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.
13.10 Certificates. Partnership Interests. may, at the discretion of
------------
the Board of Directors, be evidenced by certificates or other written
instruments evidencing the same.
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Limited
Partnership Agreement to be duly executed as of the date first above written.
PETRO, INC.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
GENERAL PARTNER
/s/ JAMES A. CARDWELL, SR.
------------------------------
James A. Cardwell, Sr.
/s/ JAMES A. CARDWELL, JR.
------------------------------
James A. Cardwell, Jr.
JAJCO II, INC.
By: /s/ JAMES A. CARDWELL, JR.
---------------------------
Authorized Officer
PETRO, INC.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
MOBIL LONG HAUL INC.
By: /s/ KEVIN T. WEIR
---------------------------
Authorized Officer
VOLVO PETRO HOLDINGS, LLC
By: Volvo Trucks North America, Inc.
its managing member
By: /s/ ROBERT GRUSSING, IV
----------------------------
52
<PAGE>
Authorized Officer
PETRO WARRANT HOLDINGS CORPORATION
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
LIMITED PARTNERS
53
<PAGE>
SCHEDULE A
to
LIMITED PARTNERSHIP AGREEMENT OF
PETRO STOPPING CENTERS HOLDINGS, L.P.
July 24, 1999
CAPITAL CONTRIBUTIONS AND SHARING PERCENTAGES
OF THE PARTNERS
<TABLE>
<CAPTION>
Common
Common General Partner Capital Contribution Sharing Percentage
- ---------------------- -------------------- ------------------
<S> <C> <C>
Petro, Inc. $ 1,082,320 1.116%
Common Limited Partners
- -----------------------
James A. Cardwell, Sr. 33,277,560 34.299
Petro, Inc. 11,064,910 11.405
James A. Cardwell, Jr. 1,346,220 1.388
JAJCO II, Inc. 3,358,460 3.462
Mobil Long Haul Inc. 9,367,190 9.655
Volvo Petro Holdings, LLC 27,823,340 28.677
Petro Holdings Warrant Corporation 9,702,220 10.000
------------- --------
Total Common: $ 97,022,220 100.0000%
------------- --------
</TABLE>
<TABLE>
<CAPTION>
Preferred
Preferred Limited Partners Capital Contribution Sharing Percentage
- -------------------------- -------------------- ------------------
<S> <C> <C> <C>
Mobil Long Haul Inc. Class A 12,000,000 (a) 48.7805%
Mobil Long Haul Inc. Class B 5,000,000 20.3252
James A. Cardwell, Sr. Class A 4,958,089 (b) 20.1548
Petro, Inc. Class A 1,875,397 (c) 7.6236
James A. Cardwell, Jr. Class A 266,132 (d) 1.0818
JAJCO II, Inc. Class A 500,383 (e) 2.0341
------------ --------
Total Preferred: $ 24,600,000 100.0000%
------------ --------
Total Common and Preferred: $121,622,220 100.0000%
============ ========
</TABLE>
____________________________
Note: Does not include accrued and unpaid preferred return on preferred
limited partnership interests in Petro Stopping Centers, L.P., which
through 6/30/99 was follows:
(a) $3,019,543
(b) $1,035,516
(c) $ 391,684
(d) $ 55,583
(e) $ 104,507
<PAGE>
RECAP OF PARTNERSHIP SHARING PERCENTAGES
Partner Without Preferred With Preferred
- ------- ----------------- --------------
Mobil Long Haul Inc. 9.6547% 21.6796%
James A. Cardwell, Sr. 34.2989 31.4380%
Petro, Inc.(*) 12.5200 11.5297%
James A. Cardwell, Jr. 1.3875 1.3257%
JAJCO II, Inc. 3.4615 3.1728%
Volvo Petro Holdings, LLC 28.6773 22.8769%
Petro Holdings Warrant Corporation 10.0000 7.9773%
-------- --------
Total 100.0000% 100.0000%
--------------------------
* Combined general partner and limited partner interests
Dated as of July 24, 1999 Petro, Inc.
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer
GENERAL PARTNER
/s/ JAMES A. CARDWELL, SR. /s/ JAMES A. CARDWELL, JR.
- ------------------------------ ---------------------------
James A. Cardwell, Sr. James A. Cardwell, Jr.
Petro, Inc. Mobil Long Haul Inc.
By: /s/ JAMES A. CARDWELL, SR. By: /s/ KEVIN T. WEIR
--------------------------- ------------------------
Authorized Officer Authorized Officer
JAJCO II, Inc. Volvo Petro Holdings, LLC
By: Volvo Trucks North America, Inc.
By: /s/ JAMES A. CARDWELL, JR. By: /s/ ROBERT GRUSSING, IV
--------------------------- -------------------------
Authorized Officer Authorized Officer
Petro Warrant Holdings Corporation
By: /s/ JAMES A. CARDWELL, SR.
---------------------------
Authorized Officer LIMITED PARTNERS
<PAGE>
EXHIBIT 4.6.1-HOLDINGS
Section 704(c) Allocation Methods
For purposes of the Limited Partnership Agreement (the "Agreement") to
which this Exhibit 4.6.1 is attached, the methodology and procedures set forth
in this Exhibit 4.6.1 shall govern with respect to the various allocation
methods to be used by the Partnership under Section 704(c) of the Code for
purposes of Section 4.6.1 of the Agreement.
Section 1. Definitions. The various defined terms set forth in the
-----------
Agreement shall govern hereunder. In addition, the following definitions are
utilized for purposes of this Exhibit 4.6.1:
1.1 "Ceiling/Curative Difference" shall mean the total amount
of additional amortization, depletion, depreciation or other cost
recovery, as compared to what would apply if the Ceiling Method was
adopted and utilized in determining Section 704(c) Allocations as of
the Effective Date, that would be allocated to Volvo on an estimated
annualized basis as a Partner in the Partnership if the Curative Method
was adopted and utilized in determining Section 704(c) Allocations as
of the Effective Date, with respect to all Partners of the Partnership.
1.2 "Ceiling Method" shall mean the traditional method subject
to the ceiling rule as set forth in Treasury Regulation (S) 1.704-3(b).
1.3 "Curative Method" shall mean the traditional method
subject to curative allocations of depreciation deductions (as
illustrated in Example 2 of Treasury Regulation (S) 1.704-3(c)(4)) as
set forth in Treasury Regulation (S) 1.704-3(c).
1.4 "Operating Partnership" shall mean Petro Stopping Centers,
L.P., a Delaware partnership, subject to the terms and conditions of
the Fourth Amended and Restated Limited Partnership Agreement of even
date with the Agreement.
1.5 "Remedial Method" shall mean the remedial method as set
forth in Treasury Regulation (S) 1.704-3(d).
1.6 "Revaluation Event" shall mean any contribution of money
or property to the capital of the Partnership by a new or existing
Partner which, pursuant to Section 704(c) of the Code and Treasury
Regulation (S) 1.704-3, results in the requirement to make 704(c)
Allocations.
1.7 "Section 704(c) Layer" shall mean the various assets to
which it is necessary to make Section 704(c) Allocations between
various Partners of either the Partnership or Operating Partnership, it
being understood that for each time there is a Revaluation Event, this
creates a Section 704(c) Layer.
1.8 "Section 704(c) Operating Rules" shall mean the
administrative and regulatory operating rules which govern the
application and adoption of the various permitted Section 704(c)
allocation methods as set forth under Treasury Regulation (S) 1.704-3.
1.9 "704(c) Report" is defined in Section 4, hereof.
<PAGE>
1.10 "Target Difference" is defined in Section 3, hereof.
Section 2. Occurrence of Revaluation Events. The cash contribution by
--------------------------------
Volvo to the Partnership will result in a Revaluation Event as of the Effective
Date for purposes of Section 704(c) of the Code. For this purpose, the various
Section 704(c) methods, and the methodology and procedures related to their use,
as set forth in Section 3, below, shall apply with respect to the cash
contribution by Volvo. For any subsequent Revaluation Event, however, unless the
Partners unanimously agree in writing otherwise, the Ceiling Method shall apply.
Section 3. Section 704(c) Methods Which Apply. For purposes of the
----------------------------------
Revaluation Event resulting from the cash contribution to be made by Volvo to
the Partnership and for any new partnership formed as a result of the
termination of the Operating Partnership pursuant to Section 708(b)(1)(B) of the
Code, and consistent with the Section 704(c) Operating Rules, the Partnership
shall adopt a combination of the Ceiling Method, the Curative Method and the
Remedial Method as to the various assets of the Partnership such that the
combined effect of the adoption of these methods, in conjunction with the
Section 704(c) elections made by the Operating Partnership, will be that Volvo
receives an additional allocation of amortization, depletion, depreciation or
other cost recovery which is equal to fifty percent (50%) of the
Ceiling/Curative Difference as of the Effective Date(the "Target Difference").
In the event the Partnership and the Operating Partnership are unable to adopt a
combination of the Ceiling Method, Curative Method and Remedial Method to obtain
an amount of additional amortization, depletion, depreciation or other cost
recovery to Volvo which is equal to the Target Difference, the Partnership and
the Operating Partnership shall adopt a combination of the Ceiling Method,
Curative Method and Remedial Method as arrives as close to the Target Difference
as possible; provided, however, if there are two or more alternative approaches
which exceed and/or fall short of the Target Difference, no approach which
exceeds the Target Difference shall be utilized if it exceeds the Target
Difference by an amount which is four percent (4%) of the Target Difference (in
other words, a total amount which is 52.0% of the Ceiling/Curative Difference)
and, in a case where an alternative approach would exceed the Target Difference
by more than four percent (4%) of the Target Difference, another alternative
approach shall be utilized even if the use of such approach results in
allocations to Volvo which are less than the Target Difference. Notwithstanding
the preceding provisions, the Remedial Method shall be utilized only as a method
of last resort and only if the use of a combination of the Ceiling Method and
Curative Method is unable to achieve a result which is within ninety-six percent
(96%) of the Target Difference (in other words, a total amount which is 48.0% of
the Ceiling/Curative Difference) and, if the Remedial Method is utilized, it
shall be subject to the limitations of the preceding sentence.
Section 4. Procedures for Determining Methods to Elect. As soon as
-------------------------------------------
practicable after the date of the Agreement, the accounting firm for the
Partnership shall determine the various Section 704(c) Layers which apply with
respect to the Partnership, the Operating Partnership and any other subsidiary
partnerships and shall, utilizing its reasonable and good faith discretion and
subject to Section 3, determine the combination of the Ceiling Method, Curative
Method and Remedial Method which is estimated to result in Volvo receiving an
allocation of amortization, depletion, depreciation and other cost recovery as
near to the Target Difference as is possible under the circumstances. Within
thirty (30) days of making such calculations and determinations, such accounting
firm for the Partnership shall issue a written report (the "704(c) Report") to
each Partner recommending the various combinations of the Ceiling Method,
Curative Method and Remedial Method to apply to the various Section 704(c)
Layers within the Partnership, the Operating Partnership and each other
subsidiary partnership for each Partner's review and comment. The 704(c) Report
shall provide such assumptions, explanations, numeric projections and other
information so as to enable the Partners to understand the 704(c) Report and
make an informed decision as to the accuracy of the information contained in
704(c) Report and the validity of the
<PAGE>
recommendations contained therein. Prior to its final adoption, the 704(c)
Report may be amended and supplemented by the accounting firm for the
Partnership from time to time. After receiving the 704(c) Report, the Partners
may engage in such discussions and propose any alternatives to the approaches
recommended in the 704(c) Report and the 704(c) Report may be amended as the
Partners agree. The Partnership and the Partners shall agree on the final
version of the 704(c) Report by no later than forty-five (45) days prior to the
final due date (with extensions) of the Partnership tax return for the 1999
Fiscal Year, and if the Partners are unable to agree on a final version of the
704(c) Report by such date, then the 704(c) Report as issued and supplemented by
the accounting firm for the Partnership shall control. Notwithstanding anything
herein to the contrary, in no event shall the various Section 704(c) allocation
methods to apply for the Partnership be elected at a time which is later than
that allowed under the Section 704(c) Operating Rules.
Section 5. Binding Effect of Estimates. The Partners understand and
---------------------------
agree that the procedures under Section 4 as well as the 704(c) Report finally
adopted will utilize good faith estimates by the Partnership's accountants and
the Partners agree that, once the various Section 704(c) methods are elected in
accordance with the 704(c) Report as finally adopted, the actual results of
these elections may differ from the estimates and/or projections agreed upon by
the Partners and set forth in the final 704(c) Report which is adopted.
<PAGE>
EXHIBIT 10.64
-1-
SECOND AMENDED AND RESTATED
REVOLVING CREDIT
AND TERM LOAN AGREEMENT
dated as of July 23, 1999
among
PETRO STOPPING CENTERS, L.P.,
BANKBOSTON, N.A.
(formerly known as
The First National Bank of Boston)
and the other lending institutions
listed on Schedule 1 hereto
----------
and
BANKBOSTON, N.A.
(formerly known as
The First National Bank of Boston),
as Agent
UNION BANK OF CALIFORNIA, N.A.,
as Co-Agent
FIRST UNION NATIONAL BANK,
as Documentation Agent
BANCBOSTON ROBERTSON STEPHENS INC.,
As Arranger
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS AND RULES OF INTERPRETATION............................ 1
1.1. Definitions................................................. 1
1.2. Rules of Interpretation..................................... 28
2. THE REVOLVING CREDIT FACILITY...................................... 29
2.1. Commitment to Lend.......................................... 29
2.2. Commitment Fee.............................................. 29
2.3. Reduction of Total Commitment............................... 29
2.4. Loan Account................................................ 30
2.5. Interest on Revolving Credit Loans.......................... 30
2.6. Requests for Revolving Credit Loans......................... 30
2.7. Conversion Options.......................................... 31
2.7.1. Conversion to Different Type of Revolving
Credit Loan...... 31
2.7.2. Continuation of Type of Revolving Credit Loan....... 31
2.7.3. Eurodollar Rate Loans............................... 32
2.8. Funds for Revolving Credit Loans............................ 32
2.8.1. Funding Procedures.................................. 32
2.8.2. Advances by Agent................................... 32
3. REPAYMENT OF THE REVOLVING CREDIT LOANS............................ 33
3.1. Maturity.................................................... 33
3.2. Mandatory Repayments of Revolving Credit Loans.............. 33
3.3. Optional Repayments of Revolving Credit Loans............... 33
4. THE TERM LOANS..................................................... 35
4.1. Term Loan A................................................. 35
4.1.1. Conversion of Revolving Credit Loans; the Term Loan. 35
4.1.2. Loan Account........................................ 35
4.1.3. Scheduled Installment Payments of Principal of Term
Loan A. 35
4.1.4. Interest on Term Loan A............................. 36
4.2. Term Loan B............................................ 37
4.2.1. Commitment to Lend.................................. 37
4.2.2. Loan Account........................................ 37
4.2.3. Scheduled Installment Payments of Principal of Term
Loan B. 37
4.2.4. Interest on Term Loan B............................. 38
4.3. Optional Prepayment of the Term Loans.................. 38
4.3.1. Term Loan A......................................... 39
4.3.2. Term Loan B......................................... 39
4.4. Mandatory Prepayment of the Term Loans................. 39
4.4.1. Proceeds............................................ 39
4.4.2. Excess Cash Flow Recapture.......................... 41
4.4.3. Application......................................... 41
5. LETTERS OF CREDIT.................................................. 42
5.1. Letter of Credit Commitments................................ 42
<PAGE>
-ii-
5.1.1. Commitment to Issue Letters of Credit............... 42
5.1.2. Letter of Credit Applications....................... 42
5.1.3. Terms of Letters of Credit.......................... 42
5.1.4. Reimbursement Obligations of Banks.................. 42
5.1.5. Participations of Banks............................. 43
5.2. Reimbursement Obligation of the Borrower.................... 43
5.3. Letter of Credit Payments................................... 44
5.4. Obligations Absolute........................................ 44
5.5. Reliance by Issuer.......................................... 45
5.6. Letter of Credit Fee........................................ 45
6. CERTAIN GENERAL PROVISIONS......................................... 45
6.1. Fees Payable to Agent....................................... 45
6.1.1. Closing Fee........................................ 45
6.1.2. Agent's Fee........................................ 46
6.2. Payments to Agent.......................................... 46
6.3. Taxes...................................................... 46
6.4. Computations............................................... 47
6.5. Inability to Determine Eurodollar Rate..................... 47
6.6. Illegality................................................. 48
6.7. Additional Costs, etc...................................... 48
6.8. Capital Adequacy........................................... 49
6.9. Certificate................................................ 50
6.10. Indemnity.................................................. 50
6.11. Interest After Default..................................... 50
6.11.1. Overdue Amounts.................................... 50
6.11.2. Amounts Not Overdue................................ 50
6.12. Interest Limitation........................................ 50
6.13. Replacement of Bank........................................ 51
7. COLLATERAL SECURITY AND GUARANTIES................................ 52
7.1. Security of Borrower....................................... 52
7.2. Guaranties and Security of Domestic Subsidiaries........... 52
7.3. Guaranties of Holdings and Petro, Inc...................... 53
8. REPRESENTATIONS AND WARRANTIES.................................... 53
8.1. Partnership and Corporate Authority........................ 53
8.1.1. Existence; Good Standing........................... 53
8.1.2. Authorization...................................... 53
8.1.3. Enforceability..................................... 54
8.2. Governmental Approvals..................................... 54
8.3. Title to Properties; Leases................................ 54
8.4. Financial Statements and Projections....................... 54
8.4.1. Financial Statements............................... 55
8.4.2. Projections........................................ 55
8.4.3. Solvency........................................... 55
8.5. No Material Changes, etc................................... 56
8.6. Franchises, Patents, Copyrights, etc....................... 56
8.7. Litigation................................................. 56
8.8. No Materially Adverse Contracts, etc....................... 56
8.9. Compliance with Other Instruments, Laws, etc............... 57
8.10. Tax Status................................................. 57
<PAGE>
-iii-
8.11. No Event of Default....................................... 57
8.12. Holding Company and Investment Company Acts............... 57
8.13. Absence of Financing Statements, etc...................... 57
8.14. Perfection of Security Interest........................... 58
8.15. Certain Transactions...................................... 58
8.16. Employee Benefit Plans.................................... 58
8.16.1. In General........................................ 58
8.16.2. Terminability of Welfare Plans.................... 58
8.16.3. Guaranteed Pension Plans.......................... 59
8.16.4. Multiemployer Plans............................... 59
8.17. Regulations U and X....................................... 59
8.18. Environmental Compliance.................................. 59
8.19. Subsidiaries, etc......................................... 61
8.20. Reasonably Equivalent Value............................... 61
8.21. Chief Executive Offices................................... 62
8.22. Fiscal Year............................................... 62
8.23. No Amendments to Certain Documents........................ 62
8.24. Representations Under Recapitalization Documents.......... 62
8.25. Insurance................................................. 62
8.26. Bank Accounts............................................. 62
8.27. Year 2000 Problem......................................... 62
8.28. Representations Regarding each Project.................... 63
8.28.1. Condition of Property............................. 63
8.28.2. Relevant Contracts................................ 63
8.29. Disclosure................................................ 63
9. AFFIRMATIVE COVENANTS OF THE BORROWER............................. 64
9.1. Punctual Payment.......................................... 64
9.2. Maintenance of Office..................................... 64
9.3. Records and Accounts...................................... 64
9.4. Financial Statements, Certificates and Information........ 64
9.5. Notices................................................... 67
9.5.1. Defaults.......................................... 67
9.5.2. Environmental Events.............................. 67
9.5.3. Notification of Claim against Collateral.......... 67
9.5.4. Notice of Litigation and Judgments................ 67
9.6. Existence; Maintenance of Properties....................... 68
9.7. Insurance.................................................. 68
9.8. Taxes...................................................... 69
9.9. Inspection of Properties and Books, etc.................... 69
9.9.1. General........................................... 69
9.9.2. Commercial Finance Examinations................... 69
9.9.3. Appraisals........................................ 70
9.9.4. Environmental Assessments......................... 70
9.10. Compliance with Laws, Contracts, Licenses, and Permits..... 70
9.11. Employee Benefit Plans..................................... 71
9.12. Use of Proceeds............................................ 71
9.13. Additional Mortgaged Property.............................. 71
9.14. Title Insurance............................................ 72
9.15. Landlord Consents.......................................... 72
9.16. Survey and Taxes........................................... 72
<PAGE>
-iv-
9.17. Local Counsel Opinions..................................... 72
9.18. Cash Management............................................ 73
9.19. Interest Rate Protection Arrangements...................... 73
9.20. Cost Overruns.............................................. 73
9.21. Contingency Reserve........................................ 73
9.22. Deposit of Funds Advanced.................................. 73
9.23. Advances to Contractor..................................... 73
9.24. Construction Inspector..................................... 74
9.25. Completion of Project...................................... 74
9.26. Further Assurances......................................... 75
9.27. Compliance with Environmental Laws......................... 75
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER....................... 75
10.1. Restrictions on Indebtedness............................... 75
10.2. Restrictions on Liens...................................... 78
10.3. Restrictions on Investments................................ 80
10.4. Distributions.............................................. 82
10.5. Merger, Consolidation and Disposition of Assets............ 83
10.5.1. Mergers and Acquisitions........................... 83
10.5.2. Disposition of Assets.............................. 84
10.6. Sale and Leaseback......................................... 85
10.7. Employee Benefit Plans..................................... 86
10.8. Transactions with Affiliates............................... 86
10.9. No Changes to Old Notes, Senior Notes or Discount Notes.... 86
10.10. Fiscal Year................................................ 86
10.11. No Negative Pledges........................................ 87
10.12. Upstream Limitations....................................... 87
10.13. Inconsistent Agreements.................................... 87
10.14. Undeveloped Land........................................... 87
11. FINANCIAL COVENANTS OF THE BORROWER.............................. 87
11.1. Maximum Consolidated Leverage Ratio........................ 87
11.2. Minimum Net Worth.......................................... 88
11.3. Consolidated Cash Flow Ratio............................... 88
11.4. Consolidated EBITDA/Interest............................... 88
11.5. Operating Leases........................................... 89
12. CLOSING CONDITIONS............................................... 89
12.1. Loan Documents, etc........................................ 89
12.1.1. Loan Documents..................................... 89
12.1.2. Recapitalization Documents......................... 89
12.1.3. Discount Notes..................................... 89
12.2. Certified Copies of Charter Documents...................... 89
12.3. Action..................................................... 90
12.4. Incumbency Certificate..................................... 90
12.5. Validity of Liens.......................................... 90
12.6. Perfection Certificates and UCC Search Results............. 90
12.7. Certificates of Insurance.................................. 90
12.8. FEMA Certification......................................... 90
12.9. Opinions of Counsel........................................ 90
12.10. Payment of Fees............................................ 91
<PAGE>
-v-
12.11. Solvency Certificate....................................... 91
12.12. Consent Under Senior Indenture............................. 91
12.13. Discount Notes............................................. 91
12.14. Satisfaction of Conditions of Recapitalization Documents... 91
12.15. Completion of Recapitalization............................. 91
12.16. No Material Adverse Change................................. 91
12.17. Capitalization............................................. 91
12.18. Transaction Costs.......................................... 91
12.19. Consents and Approvals..................................... 92
12.20. Pro Forma Balance Sheet.................................... 92
12.21. Pro Forma Compliance Certificate........................... 92
13. CONDITIONS TO ALL BORROWINGS...................................... 92
13.1. Representations True; No Event of Default.................. 92
13.2. No Legal Impediment........................................ 92
13.3. Governmental Regulation.................................... 92
13.4. Proceedings and Documents.................................. 92
13.5. Indenture Compliance....................................... 93
13.6. Conditions to Revolving Credit Loans for Permitted
Acquisitions. .................................................... 93
13.6.1. Acquisition Documents.............................. 93
13.6.2. Use of Proceeds.................................... 93
13.7. Conditions to Revolving Credit Loans for Permitted
Acquisitions of Real Estate....................................... 93
13.7.1. Environmental Matters.............................. 93
13.7.2. Survey and Title................................... 93
13.7.3. Mortgage........................................... 94
13.7.4. Local Counsel Opinion.............................. 94
13.7.5. Insurance.......................................... 94
13.7.6. Use of Proceeds.................................... 94
13.8. Conditions to Revolving Credit Loans for Construction...... 94
13.8.1. Borrower's Requisition............................. 94
13.8.2. Construction Documents............................. 94
13.8.3. Other Contracts.................................... 95
13.8.4. Construction Budget................................ 95
13.8.5. Construction Schedule.............................. 95
13.8.6. Plans and Specifications........................... 95
13.8.7. Mortgage........................................... 95
13.8.8. Title Policy....................................... 95
13.8.9. Other Insurance.................................... 95
13.8.10.Pro Forma Compliance............................... 95
13.8.11.Environmental Report............................... 96
13.8.12.Legal Opinions..................................... 96
13.8.13 Lien Search........................................ 96
13.8.14 Notices............................................ 96
13.8.15 Appraisal.......................................... 96
13.9. Conditions to Revolving Credit Loans for Improvements
Subsequent to an Initial Project Loan............................. 96
13.9.1. Borrower's Requisition............................. 96
13.9.2. No Damage.......................................... 96
13.9.3. Certificate........................................ 97
<PAGE>
-vi-
14. EVENTS OF DEFAULT; ACCELERATION; ETC............................. 97
14.1. Events of Default and Acceleration......................... 97
14.2. Termination of Commitments................................. 100
14.3. Remedies................................................... 101
14.4. Distribution of Collateral Proceeds........................ 101
15. SETOFF........................................................... 102
16. THE AGENT........................................................ 102
16.1. Authorization.............................................. 102
16.2. Employees and Agents....................................... 103
16.3. No Liability............................................... 103
16.4. No Representations......................................... 103
16.4.1. General............................................ 103
16.4.2. Closing Documentation, etc......................... 104
16.5. Payments................................................... 104
16.5.1. Payments to Agent.................................. 104
16.5.2. Distribution by Agent.............................. 104
16.5.3. Deliquent Banks.................................... 104
16.6. Holders.................................................... 105
16.7. Indemnity.................................................. 105
16.8. Agent as Bank.............................................. 105
16.9. Resignation................................................ 105
16.10. Notification of Defaults and Events of Default............. 106
16.11. Duties in the Case of Enforcement.......................... 106
17. EXPENSES.......................................................... 106
18. INDEMNIFICATION................................................... 107
19. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..................... 108
19.1. Sharing of Information with Section 20 Subsidiary.......... 108
19.2. Confidentiality............................................ 108
19.3. Prior Notification......................................... 109
19.4. Other...................................................... 109
20. SURVIVAL OF COVENANTS, ETC........................................ 109
21. ASSIGNMENT AND PARTICIPATION...................................... 110
21.1. Conditions to Assignment by Banks.......................... 110
21.2. Certain Representations and Warranties; Limitations;
Covenants......................................................... 111
21.3. Register................................................... 112
21.4. New Notes.................................................. 112
21.5. Participations............................................. 112
21.6. Disclosure................................................. 113
21.7. Assignee or Participant Affiliated with the Borrower....... 113
21.8. Miscellaneous Assignment Provisions........................ 113
21.9. Assignment by Borrower..................................... 114
21.10. Syndication................................................ 114
22. NOTICES, ETC...................................................... 114
<PAGE>
-vii-
23. GOVERNING LAW..................................................... 115
24. HEADINGS.......................................................... 115
25. COUNTERPARTS...................................................... 115
26. ENTIRE AGREEMENT, ETC............................................. 115
27. WAIVER OF JURY TRIAL.............................................. 115
28. CONSENTS, AMENDMENTS, WAIVERS, ETC................................ 116
29. SEVERABILITY...................................................... 117
30. NO RECOURSE AGAINST OTHERS........................................ 117
31. TRANSITIONAL ARRANGEMENTS......................................... 117
31.1. Original Credit Agreement Superseded....................... 117
31.2. Return and Cancellation of Notes........................... 117
31.3. Interest and Fees Under Superseded Agreement............... 117
<PAGE>
-viii-
Schedules
---------
Schedule 1 - Banks; Commitments; Commitment Percentages
Schedule 8.3 - Titles to Properties; Leases
Schedule 8.7 - Litigation
Schedule 8.15 - Certain Officer, Director and Employee Transactions
Schedule 8.16 - ERISA Matters
Schedule 8.18 - Environmental Matters
Schedule 8.19 - Joint Ventures and Partnerships
Schedule 8.25 - Insurance
Schedule 8.26 - Bank Accounts
Schedule 10.1 - Indebtedness
Schedule 10.2 - Liens
Schedule 10.3 - Investments
Schedule 10.8 - 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 B - Form of Loan Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Mortgage
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 Holdings Guaranty
Exhibit J-3 - Form of General Partner 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 - Intentionally omitted.
Exhibit O - Borrower's Requisition
Exhibit P - Construction Inspectors Certificate
Exhibit Q - Surveyor's Certificate
<PAGE>
SECOND AMENDED AND RESTATED
---------------------------
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
This SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
is made as of July 23, 1999, 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, BANKBOSTON, N.A. (formerly
known as The First National Bank of Boston), a national banking association, and
the other lending institutions listed on Schedule 1, BANKBOSTON, N.A. (formerly
-------- -
known as The First National Bank of Boston), as agent for itself and such other
lending institutions, UNION BANK OF CALIFORNIA, N.A., as Co-Agent, and FIRST
UNION NATIONAL BANK, as Documentation Agent.
WHEREAS, pursuant to 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 "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
finance Capital Expenditures, including the acquisition, construction and
upgrades of operating facilities, to pay fees and expenses relating to the
Recapitalization and for general corporate and working capital purposes, and the
Banks are willing to amend and restate the original Credit Agreement and provide
such additional financing on the terms 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:
Accounts Receivable. All rights of the Borrower or any of its Subsidiaries
-------- ----------
to payment for goods sold, leased or otherwise marketed in the ordinary course
of business and all rights of the Borrower or any of its Subsidiaries to payment
for services rendered in the ordinary course of business and all sums of money
or other proceeds due thereon.
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)9.4(c) hereof for the Borrower's fiscal quarter most recently ended.
<PAGE>
-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. BankBoston, N.A. (f/k/a The First National Bank of Boston), acting
-----
as agent for the Banks.
Agent's Special Counsel. Bingham Dana 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>
Leverage Base Eurodollar Base Eurodollar Letter of
-------- ---- ---------- ---- ---------- ---------
Level Ratio Rate Rate A Rate Rate B Credit
---- ----- ---- ------ ---- ------ ------
A Loans Loans B Loans Loans Fee
------- ----- ------- ----- ---
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
I Greater than or 1.25% 2.75% 1.50% 3.00% 2.75%
equal to
4.50:1.00
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
II Less than 1.00% 2.50% 1.50% 3.00% 2.50%
4.50:1.00 but
greater than or
equal to
4.00:1.00
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
III Less than 0.75% 2.25% 1.50% 3.00% 2.25%
4.00:1.00
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</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 December 31,
1999, the Applicable Margin shall not be less than the Applicable Margin set
forth above as Level II, and (b) if the Borrower fails to deliver any Compliance
Certificate when required by (S)9.4(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.
<PAGE>
-3-
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.
Arranger. BancBoston Robertson Stephens Inc.
--------
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.
Assignment and Acceptance. See (S)21.1.
-------------------------
Assignment of Contracts. Collectively, the collateral assignments of
-----------------------
Construction Contracts, Architect's Contracts (if any) and other applicable
material contracts executed and delivered by the Borrower to the Agent in
connection with each Project and substantially in the form of Exhibit M 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. December 31, 1998.
------------------
Banks. BKB 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)21.
Base Rate. The higher of (a) the annual rate of interest announced from
---------
time to time by BKB (or the Agent) 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 and all or any portion of the
-----------------
Term Loan A 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.
---------------
<PAGE>
-4-
BKB. BankBoston, N.A. (f/k/a The First National Bank of Boston), a
---
national banking association, in its individual capacity.
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.
Borrower's Requisition. As defined in (S)13.8.1.
----------------------
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 or permitted
to be capitalized and shown on the balance sheet of such Person in accordance
with generally accepted accounting principles (and in the case of amounts
permitted to be capitalized, actually so capitalized), 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.
<PAGE>
-5-
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.
Cardwell Group. J.A. Cardwell, Sr., James A. Cardwell, Jr. and their
--------------
respective spouses, lineal descendants, estates and Affiliates, including Petro,
Inc. (a corporation wholly owned by J.A. Cardwell, Sr.), and JAJCO II, Inc. (a
corporation wholly owned by James A. Cardwell, Jr.).
CERCLA. See (S)8.18.
------
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);
(b) Volvo, Mobil and the Cardwell Group shall at any time,
legally or beneficially own less than 51% in the aggregate of the
partnership interests of Holdings; provided, however, that each of
-------- -------
Volvo, Mobil and the Cardwell Group shall continue to own partnership
interests of Holdings at all times;
(c) Holdings shall at any time, legally or beneficially,
directly or indirectly own less than 99% of the partnership interests
of the Borrower; or
(d) either (i) a "Change of Control" (as such term is defined in
the Senior Notes Indenture as in effect on the Closing Date) or (ii) a
"Change of Control" as defined in any amendment to the Senior Notes
Indenture.
Chartwell. Chartwell Investments, Inc., a Delaware corporation.
---------
Chartwell Purchase Agreement. The Partnership Interest Subscription and
----------------------------
Purchase Agreement, dated as of July 23 1999, among the Borrower, Petro, Inc.,
Petro GP, Petro LP, Mobil, Volvo, James A. Cardwell, Sr., James A Cardwell, Jr.
and JAJCO II, Inc., and in the form delivered to the Agent on or prior to the
Closing Date.
Closing Date. The first date on which the conditions set forth in (S)12
------------
have been satisfied and any Revolving Credit Loans and the Term Loan B are to be
made or any Letter of Credit is to be issued hereunder, which date is July 23,
1999.
Code. The Internal Revenue Code of 1986.
----
Collateral. All of the property, rights and interests of the Borrower and
----------
its Subsidiaries (other than Immaterial Subsidiaries) and the pledge by Holdings
of all of
<PAGE>
-6-
the partnership interests in the Borrower, that are or are intended to be
subject to the security interests and mortgages created by the Security
Documents.
Comdata. Comdata Network, Inc. d/b/a Comdata Corporation, a Maryland
-------
corporation.
Comdata Agreement. The Agreement dated as of March 3, 1999, between
-----------------
Comdata and the Borrower, providing for, among other things, the transfer by the
Borrower to Comdata of certain collection rights with respect to the Subject
Receivables as the same may be amended or modified, provided that any amendment
--------
or modification which would result in an increase in the credit exposure or
obligations of the Borrower or any material adverse change (when considered as a
whole) in the economic terms of the transaction or any material change in the
nature of the transactions contemplated thereby shall be in form and substance
satisfactory to the Agent.
Comdata Subordination Agreement. The Subordination Agreement, dated as of
-------------------------------
July 23, 1999, pursuant to which the Agent, on behalf of itself and the Banks,
subordinates its lien in the Subject Receivables to Comdata, and in form and
substance satisfactory to the Agent.
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. Following the Conversion Date, the Commitment of each Bank shall be
adjusted to reflect the conversion of that portion of the Total Commitment which
exceeds $25,000,000 to the Term Loan A.
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 and the Term
Loan B, the percentage amount set forth on Schedule 1 of such Bank's commitment
-------- -
to make the Term Loan A and the Term Loan B.
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)9.4(c).
----------------------
Consent Documents. Collectively, the Solicitation of Consents to Indenture
-----------------
Amendments, dated June 15, 1999, and the Consent to Indenture Amendments with
<PAGE>
-7-
respect to 10 1/2% Senior Notes Due 2007, in the form delivered to the Agent on
or prior to the Closing Date.
Consolidated or consolidated. With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of a Person 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 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 Maintenance Capital Expenditures
-----
during 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)6.1.
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, plus (g) to the
----
extent deducted in calculating Consolidated Net Income for such period,
expenditures paid or incurred to become "Year 2000 Ready" during the year ended
December 31, 1999 in an aggregate amount not to exceed $800,000 plus (h) to the
----
extent deducted in calculating Consolidated Net Income for such period, a
portion determined as provided herein of the start up expenses for Projects
incurred during the twelve (12) month period following the Closing Date in an
aggregate amount not to exceed $1,800,000; the portion added on any fiscal
quarter end shall be seventy-five percent (75%) of the amount deducted in the
fiscal quarter then ended,
<PAGE>
-8-
fifty percent (50%) of the amount deducted in the preceding fiscal quarter and
twenty-five percent (25%) of the amount deducted in the second preceding fiscal
quarter.
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 (whether expensed or capitalized) 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 or in
connection with a reduction in the Total Commitment, plus (c) 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 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), plus (f) start up expenses added to Consolidated EBITDA for
----
such period under clause (h) of the definition thereof, plus (g) expenditures to
----
become "Year 2000 Ready" added to Consolidated EBITDA for such period under
clause (g) of the definition thereof.
Consolidated Financial Obligations. For any period, and without
----------------------------------
duplication, the sum of (a) all scheduled payments of principal on Indebtedness
of the Borrower and its Subsidiaries, including payments of principal in respect
of Capital Leases, which came due during such period, 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
(including indebtedness evidenced by notes or bonds) or the obtaining of credit
or in respect of Capitalized Leases (other than Indebtedness as described in
clause (l) of the definition of Indebtedness, contingent liabilities of the
Borrower to Comdata arising under the Comdata Agreement and Indebtedness
permitted by (S)10.1(b) hereof), plus (without duplication) (b) the sum of (i)
----- --
the aggregate Maximum Drawing Amount of all Letters of Credit outstanding and
(ii) all Indebtedness to third parties (other than Indebtedness described in
(S)10.1(e)) guaranteed by the Borrower or any of its Subsidiaries in excess of
$7,500,000.
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
<PAGE>
-9-
duplication, the aggregate Capital Interests of the Borrower, less all amounts,
----
if any, attributable to Redeemable Capital Interests in such Person.
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, other than Indebtedness of
the Borrower to Comdata arising under the Comdata Agreement, whether such
interest was or is required to be reflected as an 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 such Project, submitted by the Borrower to the Agent, in
connection with an Initial Project Loan 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"), or, if applicable, any revised
Construction Budget thereafter delivered by the Borrower to the Agent in
accordance with the Credit Agreement.
Construction Contract. As to each Project, the contract between the
------------ --------
Borrower and the Contractor party thereto.
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 in connection with an Initial Project Loan.
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 general contractor selected by the
----------
Borrower from time to time.
Conversion Date. July 23, 2002.
---------------
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 ,
(S)4.1.4 or (S)4.2.4.
Credit Agreement. This Second Amended and Restated Revolving Credit and
----------------
Term Loan Agreement, including the Schedules and Exhibits hereto.
Default. See (S)14.1.
-------
Disbursement Schedule. For each Project, the schedule of the amounts of
---------------------
Revolving Credit Loans anticipated to be requested by the Borrower each month
<PAGE>
-10-
during the term of construction of the Improvements (including an itemization of
direct costs and Indirect Costs to be included in each such requisition).
Discount Notes. The 15% Senior Discount Notes due August 1, 2008 in the
--------------
aggregate original principal amount of not more than $55,600,000 issued by
Holdings and Petro Holdings Financial pursuant to the Discount Notes Indenture
and in the form delivered to the Agent prior to the Closing Date.
Discount Notes Indenture. The Indenture dated on or prior to the Closing
------------------------
Date, among Holdings, Petro Holdings Financial and the Trustee, in the form
delivered to the Agent on or prior to the Closing Date.
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 or
other equity holders as such; the declaration or payment of any dividend on or
in respect of any partnership interest in or shares of any class of capital
stock or other equity interests 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 or other equity interests 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.
Domestic Subsidiary. Any Subsidiary (direct or indirect, existing on the
-------------------
date hereof or acquired or formed hereafter in accordance with the provisions
hereof) of the Borrower which is incorporated under the laws of the United
States of America, or a State or other subdivision of the United States of
America.
Drawdown Date. The date on which any Revolving Credit Loan or Term Loan 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, or 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), as the case may be.
Eligible Assignee. Any of (a) (i) 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; (ii)
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; (iii) 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
<PAGE>
-11-
member of the OECD; (iv) the central bank of any country which is a member of
the OECD; (v) any other bank, insurance company, commercial finance company or
other financial institution or fund approved by the Agent, such approval not to
be unreasonably withheld; and (vi) 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; and (b) any Bank and
any Affiliate of any Bank and, with respect to any Bank that is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor of such Bank or by an Affiliate of such investment
advisor (and treating all such funds so managed as a single Eligible Assignee);
provided that no Affiliate of the Borrower shall be an Eligible Assignee.
- --------
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)8.18(a).
------------------
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
-----
ERISA Affiliate. Any Person which is treated as a single employer with the
---------------
Borrower under (S)414 of the Code.
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
<PAGE>
-12-
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 and all or any portion of
-----------------------
the Term Loan A 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)14.1.
----------------
Foreign Subsidiary. Any Subsidiary (direct or indirect, existing on the
------------------
date hereof or acquired or formed hereafter in accordance with the provisions
hereof) of the Borrower which is incorporated under the laws of a jurisdiction
other than the United States of America, or a State or other subdivision of the
United States of America.
General Partner Guaranty. The General Partner Guaranty in substantially
------------------------
the form of Exhibit J-3 hereto, dated or to be dated on or prior to the Closing
-----------
Date, made by Petro, Inc. in favor of the Banks and the Agent pursuant to which
Petro, Inc. guarantees 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.
generally accepted accounting principles. (a) When used in (S)11, 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. The Second 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 Domestic Subsidiary of the Borrower (unless such Domestic
Subsidiary is an
<PAGE>
-13-
Immaterial Subsidiary) in favor of the Banks and the Agent pursuant to which
each Domestic 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.
Hazardous Substances. 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.
Holdings. Petro Stopping Centers Holdings, L.P., a Delaware limited
--------
partnership.
Holdings Guaranty. The Holdings Guaranty in substantially the form of
-----------------
Exhibit J-2 hereto, dated or to be dated on or prior to the Closing Date, made
- -----------
by Holdings in favor of the Banks and the Agent pursuant to which Holdings
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.
Holdings Partnership Agreement. The Limited Partnership Agreement of
------------------------------
Holdings, dated as of July 23, 1999, among Petro, Inc., Petro Warrant, James A
Cardwell, Sr., James A. Cardwell, Jr., JAJCO II, Inc., Mobil and Volvo Holdings,
and in the form delivered to the Agent on or prior to the Closing Date.
Immaterial Subsidiary. Any Subsidiary of the Borrower which does not
---------------------
conduct any substantial revenue producing business and has assets with an
aggregate value of less than $1,000,000, provided that the assets of all
--------
Immaterial Subsidiaries shall not exceed $5,000,000 in the aggregate and no
Subsidiary which is, or is required to be a guarantor under the Senior Notes
Indenture shall constitute an Immaterial Subsidiary.
Improvement Capital Expenditures. Capital Expenditures of the Borrower and
--------------------------------
its Subsidiaries in connection with making improvements to existing facilities
or the construction or acquisition of property not constituting New Site Capital
Expenditures.
Improvements. As to each Project, the buildings, fixtures, equipment and
------------
other improvements to be demolished, developed, constructed or renovated 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
<PAGE>
-14-
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 (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, even 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.
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 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.
Ineligible Securities. Securities which may not be underwritten or dealt
---------------------
in by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1933 (12 U.S.C. (S)24, Seventh), as amended.
<PAGE>
-15-
Initial Project Loan. With respect to any Project, the first Revolving
--------------------
Credit Loan to be made hereunder the proceeds of which will be used to finance
the Property Costs of such Project.
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, the date which
is every succeeding three (3) months from the last Interest Payment Date and, in
addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan or all or any
---------------
relevant portion of the Term Loans, (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, 6, or, if available to all of the Banks, 9 or 12 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 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) or the Term Loan
B
<PAGE>
-16-
Maturity Date (if comprising Term Loan B or a portion thereof) shall
end on the Revolving Credit Loan Maturity Date, the Term Loan A
Maturity Date or the Term Loan B Maturity Date (as the case may be).
International Standby Practices. With respect to any standby Letter of
-------------------------------
Credit, International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter of credit
practices among banks adopted by the Agent in the ordinary course of its
business as a standby letter of credit issuer and in effect at the time of
issuance of such Letter of Credit.
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 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.
Kirschner. Kirschner Investments, a Pennsylvania general partnership.
---------
Kirschner Purchase Agreement. The Partnership Interest Purchase Agreement,
----------------------------
dated as of July 23, 1999, between Holdings and Kirschner, and in the form
delivered to the Agent on or 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)5.1.1.
----------------
Letter of Credit Application. See (S)5.1.1.
----------------------------
Letter of Credit Participation. See (S)5.1.4.
------------------------------
<PAGE>
-17-
Leverage Ratio. The ratio of Consolidated Funded Indebtedness at the end
--------------
of any fiscal quarter to Consolidated EBITDA for the four (4) 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 Account. With respect to any Revolving Credit Loan, Term Loan A or
------------
Term Loan B, the records or accounts kept by any Bank with respect to such Loan.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
--------------
Applications, the Letters of Credit, the Comdata Subordination Agreement, and
the Security Documents and any agreements relating to the interest rate
protection arrangements required pursuant to (S)9.19 hereof.
Loan Request. See (S)2.6.
------------
Loans. The Revolving Credit Loans and the Term Loans.
-----
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 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 constitute at
least fifty-one percent (51%) of the Total 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 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.
<PAGE>
-18-
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 as of May 18, 1994, as amended, and as further amended by the Mortgage
Amendments 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 September 6, 1994, as amended, and as further amended by
the Mortgage Amendments, pertaining to such Mortgage on the fee interest of the
Borrower in the Real Estate located in Ocala, Florida; and (ii) the Mortgage
dated as of January 5, 1996, as amended, and as further amended by the Mortgage
Amendments, pertaining to such Mortgage on the fee interest of the Borrower in
the Real Estate located in Medford, Oregon; (c) the Mortgage dated as of January
30, 1997, as amended by the Mortgage Amendments, pertaining to such Mortgage on
the fee interest of the Borrower in the Real Estate located in Franklin,
Kentucky; (d) 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 (e) such additional mortgages and deeds of trust
as 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 which the Borrower or such Subsidiary is required to mortgage
pursuant to (S)9.13.
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 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 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 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
<PAGE>
-19-
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 complete, unconditional
certificate or certificates of occupancy for use of the New Profit Center
Improvements.
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 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 and the Term Notes.
-----
Obligations. All indebtedness, obligations and liabilities 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 Letter of Credit
Application, Letter of Credit, any interest rate protection agreements or other
instruments at any time evidencing any thereof.
Old 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.
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 Old
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.
Operating Partnership Agreement. The Fourth Amended and Restated Limited
-------------------------------
Partnership Agreement of the Borrower, dated as of July 23, 1999, among
Holdings, Petro Holdings GP, LLC, James A.. Cardwell, Jr. and Petro Inc. and in
the form delivered to the Agent on or prior to the Closing Date.
Original Credit Agreement. As defined in the preamble.
-------------------------
<PAGE>
-20-
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.
outstanding. With respect to the Loans, the aggregate unpaid principal
-----------
thereof as of any date of determination.
Partnership Pledge Agreement. The Collateral Assignment of Partnership
----------------------------
Interest in substantially the form of Exhibit F hereto, dated or to be dated as
------- -
of the Closing Date, between Holdings 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 Second Amended and Restated Perfection
-----------------------
Certificates as defined in the Security Agreements.
Permitted Acquisition Closing Date. The date on which a Permitted
----------------------------------
Acquisition occurs.
Permitted Acquisitions. See (S)10.5.1 hereof.
----------------------
Permitted Liens. Liens, security interests, mortgages and other
---------------
encumbrances permitted by (S)10.2.
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.
---------------
Petro Holdings Financial. Petro Holdings Financial Corporation, a Delaware
------------------------
corporation.
Petro, Inc.. Petro, Inc., a Texas corporation
-----------
Petro:Lube. A lube, oil and filter, tire and minor mechanical maintenance
----------
express facility for trucks and other heavy duty vehicles.
<PAGE>
-21-
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 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
Acquisition, on any Real Estate owned, leased or acquired by the Borrower or any
Subsidiary.
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 Warrant. Petro Warrant Holdings Corporation, a Delaware corporation.
-------------
Plans and Specifications. As to each Project, the plans and specifications
------------------------
for the Improvements, as modified from time to time, and more particularly
identified on a schedule to the Construction Contract pertaining thereto or with
the Construction Budget 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 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. Each of the
Borrower and the Agent agrees and acknowledges that delivery of the following
documents by a Bank which is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and intends to claim exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" shall constitute delivery of Prescribed Forms
for purposes of this definition: (i) a Form W-8, or any subsequent versions
thereof or successors thereto, and (ii) a certificate representing that such
Bank is not a bank for purposes of Section 881(c) of the Code, is not a 10-
percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of
the Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code), properly completed and
duly executed by such Bank claiming complete exemption from, or a reduced rate
of, U.S. Federal withholding tax
<PAGE>
-22-
on payments of interest by the Borrower under this Credit Agreement and the
other Loan Documents.
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 (3)
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. As applicable, (a) the construction by the Borrower or any
-------
Subsidiary of any Stopping Center or the renovation of any Improvements acquired
by the Borrower or any Subsidiary in any Permitted Acquisition, on any Real
Estate owned, leased or acquired by the Borrower or any Subsidiary, or (b) any
Petro:Lube Project, or (c) any New Profit Center Project, or (d) the development
of any Land in connection with the foregoing.
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 the Property through the Completion Date,
including without limitation all Indirect Costs.
Rate Adjustment Period. See the definition of Applicable Margin.
----------------------
<PAGE>
-23-
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 Holdings, Mobil, Volvo, James A. Cardwell, Sr.,
James A. Cardwell, Jr., JAJCO II, Inc. and certain other investors
(collectively, the "Sponsors") pursuant to the terms of the Recapitalization
Documents and the transactions contemplated thereby.
Recapitalization Closing Date. The first date on which the conditions set
-----------------------------
forth in the Recapitalization Documents have been satisfied and the
Recapitalization has occurred.
Recapitalization Documents. Collectively, the Operating Partnership
--------------------------
Agreement, the Holdings Partnership Agreement, the Consent Documents, the
Chartwell Purchase Agreement, the Kirschner Purchase 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. BankBoston, N.A. (f/k/a 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)5.2.
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 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.
<PAGE>
-24-
Replacement Asset. 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 of the Borrower, as evidenced by a board resolution, is used or will
be used in connection with the Stopping Center business of the Borrower or any
Subsidiary Guarantor or a business reasonably related thereto.
Replacement Bank. See (S)6.13.
----------------
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. July 23, 2004.
-----------------------------------
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.
----------------------
Section 20 Subsidiary. A Subsidiary of the bank holding company
---------------------
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. Collectively, the Third Amended and Restated Security
-------------------
Agreement between the Borrower and the Agent substantially in the form of
Exhibit G-1 hereto, and the Second Amended and Restated Security Agreement among
- -----------
the Subsidiaries of the Borrower and the Agent substantially in the form of
Exhibit G-2 hereto, each dated or to be dated on or prior to the Closing Date,
- ------------
and in form and substance satisfactory to the Banks and the Agent.
Security Documents. The Guaranty, the Holdings Guaranty, the General
------------------
Partner Guaranty, the Security Agreements, the Assignment of Contracts, the
Mortgages, the Trademark Assignments, the Partnership Pledge Agreements, and the
Stock Pledge Agreement.
Senior 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 Senior Notes Indenture, as amended
by the Supplemental Indenture dated as of the date hereof, and in the form
delivered to the Agent prior to the Closing Date.
Senior Notes Indenture. The Indenture dated January 30, 1997, among the
----------------------
Borrower, Petro Financial and the Trustee, as amended by the Supplemental
Indenture dated as of the date hereof in the form delivered to the Agent on or
prior to the Closing Date.
Sponsors. As defined in the definition of Recapitalization.
--------
Stock Pledge Agreement. The Second Amended and Restated Stock Pledge
----------------------
Agreement in substantially the form of Exhibit H hereto, dated or to be dated on
------- -
or
<PAGE>
-25-
prior to the Closing Date, between the Borrower and the Agent and in form and
substance satisfactory to the Banks and the Agent.
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.
Subject Receivables. Those Accounts Receivable of the Borrower or any of
-------------------
its Subsidiaries in which the collection rights with respect thereto are
transferred to Comdata pursuant to the terms of the Comdata Agreement.
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 January 30, 1997 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 substantially the
information contained in the form of certification attached hereto as Exhibit Q
---------
hereto, addressed or certified to the Agent and the Title Insurance Company.
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 partner's tax
liability in respect of the taxable income of the Borrower or to pay (in the
case of Holdings as a partner of the Borrower) the tax liability of a partner of
Holdings in respect of the taxable income of Holdings and the Borrower.
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 combined federal and state tax rate for
individuals or corporations, as the case may be (expressed as a decimal) then in
effect calculated on a consolidated basis to the extent
<PAGE>
-26-
applicable. Tax Distributions paid with respect to the first fiscal quarter of
any year shall not exceed an amount equal to twenty-five percent (25%) of the
greater of the prior year's tax liability or the amount necessary to take
advantage of applicable safe harbors for estimated tax payments.
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 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 Conversion Date as contemplated by (S)4.1 hereof.
Term Loan A Maturity Date. July 23, 2004.
--------------------------
Term Loan B. The conversion on the Closing Date of a portion of the
-----------
existing Loans made by the Banks to the Borrower pursuant to the Original Credit
Agreement to Term Loan B in the aggregate principal amount of $40,000,000
pursuant to (S)4.2.
Term Loan B Maturity Date. July 23, 2006.
--------------------------
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 the Mortgaged Property existing on the
------------
Closing Date, ALTA (or state regulated form in Texas and other states where ALTA
policies are not available) standard form mortgage policies of title insurance
issued by the Title Insurance Company in an aggregate amount not to exceed one
hundred percent (100%) of the maximum committed amount of the Loans, and if
acquired following the Closing Date, in an amount reasonably estimated by the
Borrower to equal the sum of the purchase price for such Mortgaged Property
(including all diligence, acquisition and closing costs) and all additional
Property Costs for the Project to be constructed thereon, insuring the priority
of the Mortgage of such Mortgaged Property, and that
<PAGE>
-27-
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 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). Any Title Policy for a Project under construction may
contain a "pending disbursements" or other similar limitation if the Title
Insurance Company issuing such Title Policy will not insure the priority of the
advances under a revolving credit endorsement; provided, that unless otherwise
-------- ----
agreed by the Agent, the full premium for such Title Policy shall be paid upon
the issuance thereof. The Borrower shall be entitled to enter into Mortgages for
Properties earlier than required hereunder to enable the Borrower to provide the
Agent with Title Policies under rate rules generally referred to as
"simultaneous issuance rules."
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. On the Closing Date, the Total Commitment is $85,000,000. Following
the Conversion Date, the Total Commitment shall not exceed $25,000,000.
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, the Second Amendment thereto dated as of January 30, 1997, and the Third
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 or all or any portion of the Term
----
Loans, 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)5.2.
<PAGE>
-28-
Volvo. Volvo Trucks of North America, Inc., a Delaware corporation.
-----
Volvo Holdings. Volvo Petro Holdings, L.L.C., a Delaware limited liability
--------------
company.
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 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.
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>
-29-
(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 Total
Commitment. 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)12 and (S)13,
in the case of the initial Revolving Credit Loans to be made on the Closing
Date, and (S)13, 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
<PAGE>
-30-
commitment fee then accrued on the amount of the reduction. No reduction or
termination of the Commitments may be reinstated.
2.4. Loan Account.
------------
(a) The Revolving Credit Loans and the Obligations of the
Borrower in respect thereof shall be evidenced by this Credit
Agreement and the Loan Account maintained by each Bank with respect to
the Revolving Credit Loans. 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 Revolving Credit Loan, an appropriate
notation in such Loan Account 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 in such
Loan Account shall be prima facie evidence (absent manifest error) 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 in
such Loan Account shall not limit or otherwise affect the obligation
of the Borrower hereunder to make payments of principal of, or
interest on, the Revolving Credit Loans when due. The Borrower hereby
irrevocably and unconditionally promises to pay the Revolving Credit
Loans in accordance with the terms hereof.
(b) The Borrower agrees that, upon the request to the Agent by
any Bank, the Borrower will execute and deliver to such Bank a
promissory note of the Borrower evidencing the Revolving Credit Loans
of such Bank, substantially in the form of Exhibit A-1 hereto (each a
-----------
"Revolving Credit Note"), with appropriate insertions as to date and
principal amount.
2.5. Interest on Revolving Credit Loans. Except as otherwise
----------------------------------
provided in (S)6.11, (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 irrevocably
----
and unconditionally 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 hereto (or telephonic
------- -
notice confirmed in a writing in the form of Exhibit B hereto) of each
------- -
Revolving Credit Loan requested hereunder (a "Loan Request") no later than
(a) 1:00 p.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 Loan until the date which is seven
(7) days following the Closing Date. Each such notice shall specify (i) the
principal amount of the
<PAGE>
-31-
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 construction or a Permitted Acquisition. 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 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, the Borrower shall comply
with all of the necessary provisions and conditions set forth in (S)(S)12
and 13 hereof as applicable.
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 Rate 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
<PAGE>
-32-
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 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 ten (10)
Eurodollar Rate Loans (in the aggregate including Revolving Credit
Loans and Term 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)12 and 13 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
<PAGE>
-33-
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 the Agent by such Bank within four (4) 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
Total Commitment, 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)5.2(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 the Revolving Credit Loans owing
to such Bank, 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)6.10). 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
<PAGE>
-34-
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>
-35-
4. THE TERM LOANS.
---------------
4.1. Term Loan A.
------------
4.1.1. Conversion of Revolving Credit Loans; the Term Loan.
---------------------------------------------------
Subject to the terms and conditions hereinafter set forth, including,
without limitation, the satisfaction of the conditions set forth in
(S)13 hereof, on the Conversion Date, an amount equal to the lesser of
(a) the aggregate outstanding principal amount of the Revolving Credit
Loans specified herein, and (b) the Total Commitment minus
-----
$25,000,000, shall be converted into a Term Loan A, held severally by
the Banks in accordance with their Commitment Percentages. On the
Conversion Date the Borrower shall pay to the Agent for the pro rata
--- ----
accounts of the Banks all interest accrued to such date on the
Revolving Credit Loans so converted, together with any Unpaid
Reimbursement Obligations, any commitment fees and other fees payable
to the Agent and the Banks hereunder, and, as soon as reasonably
practicable after such payment, each Bank shall surrender to the
Borrower its Revolving Credit Note (if any) and the Borrower shall, if
requested by such Bank, execute and deliver (i) a Term A Note
evidencing the amount of the outstanding Revolving Credit Loans so
converted, and (ii) a new Revolving Credit Note evidencing such Bank's
Commitment Percentage of the Total Commitment in effect following the
Conversion Date.
4.1.2. Loan Account.
------------
(a) The Term Loan A and the Obligations of the Borrower in
respect thereof shall be evidenced by this Credit Agreement and the
Loan Account maintained by each Bank with respect to the Term Loan A.
The Borrower irrevocably authorizes each Bank to make or cause to be
made, at or about the time of the Drawdown Date of the Term Loan A or
at the time of receipt of any payment of principal on such Term Loan
A, an appropriate notation in such Loan Account reflecting the making
of such Term Loan A or (as the case may be) the receipt of such
payment. The outstanding amount of the Term Loan A set forth in such
Loan Account shall be prima facie evidence (absent manifest error) 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 in
such Loan Account shall not limit or otherwise affect the obligation
of the Borrower hereunder to make payments of principal of, or
interest on, the Term Loan A when due. The Borrower hereby
irrevocably and unconditionally promises to pay the Term Loan A in
accordance with the terms hereof.
(b) The Borrower agrees that, upon the request to the Agent
by any Bank, the Borrower will execute and deliver to such Bank a
promissory note of the Borrower evidencing the Term Loan A of such
Bank, substantially in the form of Exhibit A-2 hereto (each a "Term A
------- ---
Note"), with appropriate insertions as to date and principal amount.
4.1.3. Scheduled Installment Payments of Principal of Term Loan
--------------------------------------------------------
A. The Borrower promises to pay to the Agent for the account of
-
<PAGE>
-36-
the Banks the principal amount of Term Loan A in eight (8) consecutive
quarterly installments, each equal as near as possible to one-eighth
(1/8) of the principal amount of the Term Loan A outstanding on the
Conversion Date, such installments to be due and payable on the last
day of each calendar quarter of each calendar year, commencing on
September 30, 2002, with a final payment on the Term Loan A Maturity
Date in an amount equal to the unpaid balance of Term Loan A.
4.1.4. Interest on Term Loan A.
-----------------------
(a) Interest Rates. Except as otherwise provided in
--------------
(S)6.11, 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 irrevocably and unconditionally 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 Conversion Date if all or any portion of
the Term Loan A is to bear interest at the Eurodollar Rate. After the
Term Loan A has been made, the provisions of (S)2.7 shall apply
mutatis mutandis with respect to the Term Loan A so that the Borrower
------- --------
may have the same interest rate options with respect to all or any
portion of the 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 $500,000).
(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.
<PAGE>
-37-
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 convert
existing Loans under the Original Credit Agreement and 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
$40,000,000.
4.2.2. Loan Account.
------------
(a) The Term Loan B and the Obligations of the Borrower in
respect thereof shall be evidenced by this Credit Agreement and the
Loan Account maintained by each Bank with respect to the Term Loan B.
The Borrower irrevocably authorizes each Bank to make or cause to be
made, at or about the time of the Drawdown Date of the Term Loan B or
at the time of receipt of any payment of principal on such Term Loan
B, an appropriate notation in such Loan Account reflecting the making
of such Term Loan B or (as the case may be) the receipt of such
payment. The outstanding amount of the Term Loan B set forth in such
Loan Account shall be prima facie evidence (absent manifest error) 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 in
such Loan Account shall not limit or otherwise affect the obligation
of the Borrower hereunder to make payments of principal of, or
interest on, the Term Loan B when due. The Borrower hereby
irrevocably and unconditionally promises to pay the Term Loan B in
accordance with the terms hereof.
(b) The Borrower agrees that, upon the request to the Agent
by any Bank, the Borrower will execute and deliver to such Bank a
promissory note of the Borrower evidencing the Term Loan B of such
Bank, substantially in the form of Exhibit A-3 hereto (each a "Term B
------- ---
Note"), with appropriate insertions as to date and principal amount.
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 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, 2000, with
a final payment on the Term Loan B Maturity Date in an amount equal to
the unpaid balance of Term Loan B.
Quarter Ending Payment Amount
-------------- --------------
September 30, 2000 through June 30, $ 250,000
2004
September 30, 2004 through June 30, $3,000,000
2005
<PAGE>
-38-
September 30, 2005 through March 31, $6,000,000
2006
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)6.11, 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 irrevocably and unconditionally 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 Loan until
the date which is seven (7) days following the Closing Date. 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 $500,000).
(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.
-------------------------------------
<PAGE>
-39-
4.3.1. Term Loan A. The Borrower shall have the right at any
-----------
time to prepay the Term Loan A on or before the Term Loan A 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)6.10), provided that (a) each partial prepayment
shall be in the principal amount of $500,000 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 Loan A, with adjustments to the
extent practicable to equalize any prior prepayments not exactly in
proportion. Any prepayment of principal of the Term Loan A 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 Loan A. No amount repaid with respect to the
Term Loan A may be reborrowed.
4.3.2. Term Loan B. The Borrower shall have the right at any
-----------
time to prepay the Term Loan B on or before 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 (subject to (S)6.10); provided
--------
that (a) each partial prepayment shall be in the principal amount of
$500,000 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 Loan B, with adjustments, to the extent practicable, to
equalize any prior prepayments not exactly in proportion. Any
prepayment of principal of the Term Loan B shall be applied against
the scheduled installments of principal due on the Term Loan B in the
inverse order of maturity. No amount repaid with respect to the Term
Loan B may be reborrowed. If the Borrower prepays the Term Loan B in
whole or in part, the Borrower shall pay a premium with respect to
each such prepayment in an amount determined in accordance with the
percentages set forth in the following table opposite the period
during which such prepayment is made:
Period Prepayment Premium
------ ------------------
Closing Date through
first anniversary thereof 1% of amount prepaid
First anniversary of
Closing Date through second
anniversary of Closing Date 0.50% of amount prepaid
Thereafter -0-
4.4. Mandatory Prepayment of the Term 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
<PAGE>
-40-
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)10.2(a), (S)10.2(b), (S)10.2(e), (S)10.2(f), (S)10.2(i),
(S)10.2(k), (S)10.2(l), (S)10.2(q) and (S)10.2(s)) 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 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 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)10.2(a), (S)10.2(b), (S)10.2(e), (S)10.2(f),
(S)10.2(i), (S)10.2(k), (S)10.2(l), (S)10.2(q) and (S)10.2(s)),
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,
private investments by existing investors and their affiliates in an
aggregate amount not to exceed $10,000,000 and proceeds from the
issuance of the Discount Notes, (c) proceeds from debt issuances other
than those permitted pursuant to (S)10.1, and (d) 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(d)(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 if such
prepayment is made prior to the Conversion Date, to the Term Loan B
based on the then outstanding amount of the Term Loan B and applied
against the scheduled installments of principal due in the inverse
order of maturity, or, if such prepayment is made following the
Conversion Date, 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
<PAGE>
-41-
scheduled installments of principal due or the respective Term Loans
in the inverse order of maturity. Furthermore, if following the
Conversion Date, there are no amounts outstanding under the Term
Loans, 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, 1999 an amount equal to fifty percent
(50%) 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, however any payments required to be made
-------- -------
pursuant to this (S)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 (a) the Leverage Ratio as at the end of each of (i)
the fiscal year for which such payments are to be made and (ii) the
fiscal quarter occurring immediately preceding the date such payment
would otherwise be due and payable was less than 3.00:1.00 and (b) No
Default or Event of Default has occurred and is continuing. Such
payments shall be applied if such prepayment is made prior to the
Conversion Date, to the Term Loan B based on the then outstanding
amount of the Term Loan B and applied against the scheduled
installments of principal due in the inverse order of maturity, or, if
such prepayment is made following the Conversion Date, 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 or the respective Term Loans and applied
against the scheduled installments of principal due or the respective
Term Loans in the inverse order of maturity following the Conversion
Date, if there are no amounts outstanding under the Term Loans, 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 the Term Loan B
-----------
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 prior to the time such payment is due, fifty percent
(50%) 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,
or, if there are no outstanding amounts due under the Term Loan A,
then to repay outstanding Revolving Credit Loans to the extent of the
amounts outstanding under the Revolving Credit Loans and to provide
cash collateral for the Obligations and so long as no Default has
occurred and is continuing, the remainder of such prepayments shall be
retained by the Borrower. The Agent shall promptly notify the Borrower
in writing of any such elections.
Notwithstanding the requirements of (S)(S)4.4.1, 4.4.2, and
4.4.3, no repayments under this (S)4.4 shall be applied to reduce the
Total Commitment to an amount less than $25,000,000. If any such
payment would otherwise be required, it shall be applied to repay any
outstanding
<PAGE>
-42-
Revolving Credit Loans (or cash collateralize Letters of Credit, if
any) but not to reduce the Total Commitment.
5. LETTERS OF CREDIT.
-----------------
5.1. Letter of Credit Commitments.
----------------------------
5.1.1. 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)5.1.4 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 $10,000,000 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.
5.1.2. 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 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.
5.1.3. 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 date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, thirty (30) days) prior to the Revolving Credit
Loan Maturity Date. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs or, in the case of a
standby Letter of Credit issued on or after January 1, 1999, either
the Uniform Customs or International Standby Practices.
5.1.4. 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
<PAGE>
-43-
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)5.2 (such agreement for a Bank being called herein the "Letter of
Credit Participation" of such Bank).
5.1.5. 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)5.2 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)5.2.
5.2. 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)5.2(b) and (c)
and subject to the last sentence of (S)5.3, 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 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)5.2 at any time from the date such
amounts become due and payable (whether as stated in this (S)5.2, 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)6.11 for overdue principal on the Revolving Credit Loans. Cash
collateral held by the Agent pursuant to this (S)5.2 shall, at the written
request of the Borrower,
<PAGE>
-44-
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)5.2.
5.3. 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)5.2 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)13 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
connection with such presentment shall be in conformity on their face in
all material respects with such Letter of Credit.
5.4. Obligations Absolute. The Borrower's obligations under this (S)5
--------------------
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)5.2
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
<PAGE>
-45-
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)5.3.
5.5. Reliance by Issuer. To the extent not inconsistent with (S)5.4,
------------------
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 Loans
or of a Letter of Credit Participation.
5.6. Letter of Credit Fee. The Borrower shall pay to the Agent a fee
--------------------
(in each case, a "Letter of Credit Fee") 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 such
--- ----
Letter of Credit Fee (but not the Standby Issuance Fee). The Letter of
Credit Fee for each Letter of Credit shall be payable quarterly in arrears
on the last Business Day of each calendar quarter then ending. 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.
6. CERTAIN GENERAL PROVISIONS.
--------------------------
6.1. Fees Payable to Agent.
---------------------
6.1.1. 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.
<PAGE>
-46-
6.1.2. Agent's Fee. The Borrower shall pay to the Agent an
------- ---
Agent's fee as set forth in the letter agreement dated as of the
Closing Date between the Borrower and the Agent.
6.2. 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
6.3. Taxes. (a) Any and all payments by the Borrower to each Bank or
-----
the Agent under this Credit Agreement 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)6.3) 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 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)6.3) 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
<PAGE>
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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)6.3 (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 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.
6.4. Computations. All computations of interest on the Base Rate Loans
------------
shall be based on a 365-day year and paid for the actual number of days
elapsed. All computations of interest on the Eurodollar Rate 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 Loan Accounts 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.
6.5. 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
<PAGE>
-48-
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.
6.6. 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)6.6, 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.
6.7. 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)6.8 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,
or any class of loans, letters of credit or commitments of which any
of the
<PAGE>
-49-
Loans or such Bank's 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 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, 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 ninety (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.
6.8. 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)6.9 hereof. Each
<PAGE>
-50-
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)6.8 incurred or accruing more than ninety (90) days
prior to the presentation of such certificate.
6.9. Certificate. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)(S)6.7 or 6.8 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.
6.10. Indemnity. The Borrower agrees to indemnify each Bank and to
---------
hold each Bank harmless from and against any loss, cost or expense
(including with respect to the Applicable Margin and fees owing to the
Agent or any Bank) 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 a Conversion
Request relating thereto in accordance with (S)2.6, (S)2.7, (S)4.1.4(b) or
(S)4.2.4(b)), or (c) 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.
6.11. Interest After Default.
----------------------
6.11.1. 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 two percent (2%) 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).
6.11.2. 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)28, 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, and (S)4.2.4.
6.12. 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
<PAGE>
-51-
other jurisdictions whose laws may be mandatorily applicable to such Bank),
then, in that event, notwithstanding anything to the contrary in the Loan
Documents, the Credit Agreement or any other agreements entered into in
connection with or as security for the Obligations, 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 Loan Documents, the Credit
Agreement or any other agreements entered into in connection with or as
security for the Obligations or otherwise in connection with the
Obligations 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
Loans is accelerated, 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 this Credit Agreement 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 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 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.
6.13. Replacement of Bank. In the event that any Bank makes a demand
-------------------
for payment pursuant to (S)(S)6.3, 6.7 or 6.8, or terminates the Commitment
of the Bank to make, or convert Loans of another Type to, Eurodollar Rate
Loans pursuant to (S)6.6, the Borrower shall have the right, if no Default
or Event of Default then exists, to replace such Bank in accordance
<PAGE>
-52-
with this (S)6.13. 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 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)21 hereof. Upon
satisfaction of the requirements set forth in the second sentence of this
(S)6.13, 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)6.10 and all
other amounts owed by the Borrower to such Bank (other than the principal
of and interest on the Obligations of such Bank purchased by the
Replacement Bank), and execution of the Assignment and Acceptance by all
parties thereto in accordance with (S)21 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)6.3, 6.7 or 6.8 (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 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)6.3, 6.7 or 6.8) 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.
7. COLLATERAL SECURITY AND GUARANTIES.
----------------------------------
7.1. Security of Borrower. The Obligations shall be equally and
--------------------
ratably secured by (a) 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, and (b) a pledge by the
Borrower of (i) one hundred percent (100%) of the capital stock of each of
its Domestic Subsidiaries, and (ii) sixty-six percent (66%) of the capital
stock of each of its Foreign Subsidiaries, pursuant to the terms of the
Stock Pledge Agreement, provided, that the Borrower will not be required to
--------
pledge the capital stock of any Subsidiary which is an Immaterial
Subsidiary.
7.2. Guaranties and Security of Domestic Subsidiaries. The Obligations
------------------------------------------------
shall also be guaranteed pursuant to the terms of the Guaranty by
<PAGE>
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each of the Domestic Subsidiaries of the Borrower (unless such Domestic
Subsidiary is an Immaterial Subsidiary). The obligations of the Domestic
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 Domestic Subsidiary is a party.
7.3. Guaranties of Holdings and Petro, Inc. The Obligations shall
-------------------------------------
also be guaranteed pursuant to the terms of the Holdings Guaranty and the
General Partner Guaranty. The Obligations of Holdings under the Holdings
Guaranty shall be in turn solely secured by a perfected first priority
security interest in all of the partnership interests of the Borrower owned
by Holdings pursuant to the Partnership Pledge Agreement to which it is a
party. The Obligations of Petro, Inc. under the General Partner Guaranty
shall be in turn solely secured by a perfected first priority security
interest in all of the partnership interests of the Borrower owned by
Petro, Inc. pursuant to the Partnership Pledge Agreement to which it is a
party.
8. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the Agent as follows:
8.1. Partnership and Corporate Authority.
-----------------------------------
8.1.1. 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, as the case may be, 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.
8.1.2. 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 hereby and thereby by such party (a) are
within the corporate or partnership authority of such party, (b) have
been
<PAGE>
-54-
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.
8.1.3. 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.
8.2. 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 such person 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 8.18 hereto) with, any governmental agency or authority other than
-------------
those already obtained, other than any approval, consent or filing which
would not 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 or the rights and obligations arising
under the transactions contemplated in the Loan Documents, 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.
8.3. Title to Properties; Leases. Except as indicated on Schedule 8.3
--------------------------- ------------
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 or in accordance with this Credit Agreement), subject to no
rights of others, including any mortgages, leases, conditional sales
agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
8.4. Financial Statements and Projections.
------------------------------------
<PAGE>
-55-
8.4.1. 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, 1998, and a
consolidated statement of income of the Borrower and its Subsidiaries for
the fiscal year then ended, reported on by Arthur Andersen LLP together
with a copy of the Borrower's interim unaudited financial statements
through March 31, 1999. 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.
8.4.2. 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 seven twelve month periods
beginning on the Closing Date most recently delivered to the Agent have
been delivered to the Agent on or prior to the Closing Date. The
projections were based when made upon what were believed by the Borrower
and its management on the date when made to be reasonable estimates and
assumptions, have been prepared on the basis of the assumptions stated
therein and as of the Closing Date reflect what are believed to be 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.
8.4.3. Solvency. (a) The Borrower and its Subsidiaries, on a
--------
consolidated basis, both before and after giving effect to the
Recapitalization, 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>
-56-
(b) Holdings and its Subsidiaries, on a consolidated basis,
after giving effect to the issuance of the Discount Notes, 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 Holdings 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.
8.5. 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 and other than the
Recapitalization and the financing thereof. Since the Balance Sheet Date,
the Borrower has not made any Distribution other than Tax Distributions in
amounts which would be permitted hereunder.
8.6. 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.
8.7. Litigation. Except as set forth in Schedule 8.7 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 would not reasonably be expected to have, either in any case or in
the aggregate, a material adverse effect on the business, assets or
financial condition 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.
8.8. 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
<PAGE>
-57-
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.
8.9. 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.
8.10. Tax Status. The Borrower and its Subsidiaries (a) have made or
----------
filed all federal and state income and all other material 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.
8.11. No Event of Default. No Default or Event of Default has occurred
-------------------
and is continuing.
8.12. 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.
8.13. 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 (other than those
filed in error and those evidencing indebtedness paid and discharged in
full) 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
<PAGE>
-58-
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.
8.14. 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 or Mortgages or amendments thereto 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.
8.15. Certain Transactions. Except for transactions pursuant to which
--------------------
the Borrower or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than such Person 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 8.15
-------------
hereto and except for renewals and extensions of the existing agreements
described on Schedule 8.15 so long as such renewals and extensions are on
-------------
substantially the same terms as the agreement being renewed or extended.
8.16. Employee Benefit Plans.
----------------------
8.16.1. In General. Except as set forth on Schedule 8.16
---------- -------------
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 or made available 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, if any.
8.16.2. Terminability of Welfare Plans. 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 may be terminated by the Borrower or an
ERISA Affiliate, as appropriate, at any time (or at any time subsequent to
the expiration of any applicable bargaining agreement) in the discretion
<PAGE>
-59-
of the Borrower or such ERISA Affiliate, without material liability to any
Person.
8.16.3. 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 prior to the date of this
representation), and on the actuarial methods and assumptions 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 by more
than $1,000,000, disregarding for this purpose the benefit liabilities and
assets of any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
8.16.4. 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.
8.17. 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)12.18 hereof and thereafter for working capital and
partnership and general corporate purposes and Capital Expenditures (including
making Investments in Subsidiaries to permit such Subsidiaries to make Capital
Expenditures as permitted hereunder) (subject to the limitations set forth in
(S)9.12 hereof). 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.
8.18. Environmental Compliance. The Borrower has taken all reasonable
------------------------
steps to investigate the past and present condition and usage of the
<PAGE>
-60-
Real Estate and the operations conducted thereon and, based upon such
diligent investigation, has determined that except as set forth on Schedule
--------
8.18 hereto:
----
(a) none of the Borrower, its Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or has
received written notice of an 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 "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
Substance 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)8.7;
(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
except in accordance with any applicable Environmental Laws; (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,
<PAGE>
-61-
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 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.
8.19. 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 8.19 hereto, and except for transactions listed on
-------------
Schedule 10.8 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.
8.20. 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.
<PAGE>
-62-
8.21. 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.
8.22. Fiscal Year. The Borrower has a fiscal year which is the twelve
-----------
months ending on December 31 of each calendar year.
8.23. No Amendments to Certain Documents. Since the Closing Date the
----------------------------------
Borrower has not amended the Operating Partnership Agreement, the Holdings
Partnership Agreement, the Consent Documents, the Chartwell Purchase
Agreement or the Kirschner Purchase Agreement in any material respect. Each
of the representations and warranties made by the Borrower in any of the
Loan Documents, the Discount Notes Indenture, the Discount Notes, the
Operating Partnership Agreement, the Holdings Partnership Agreement, the
Consent Documents, the Chartwell Purchase Agreement or the Kirschner
Purchase Agreement 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.
8.24. 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 made by any of the Borrower,
Petro Warrant, the Cardwell Group, Mobil, or Volvo contained in the
Recapitalization Documents is not true and correct in all material respects
as of the Closing Date.
8.25. 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 8.25 hereto, as amended
-------------
from time to time in accordance with sound business practices.
8.26. Bank Accounts. Schedule 8.26 (as updated on a quarterly basis
------------- -------------
in accordance with (S)9.4 hereto) sets forth the account numbers and
location of all bank accounts of the Borrower and all of its Subsidiaries.
8.27. Year 2000 Problem. The Borrower and its Subsidiaries have (i)
-----------------
reviewed the areas within their businesses and operations which could be
adversely affected by failure to become "Year 2000 Ready" (i.e. that
computer applications imbedded microchips and other systems used by the
Borrower or any of its Subsidiaries or any of its material vendors, will be
able properly to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999),
(ii) developed a detailed plan and timetable to become "Year 2000 Ready" in
a timely manner, and (iii) committed a combination of external and internal
resources to support the Year 2000 plan of the Borrower and its
Subsidiaries. Based upon such review, the
<PAGE>
-63-
Borrower reasonably believes that the Borrower and its Subsidiaries will
become "Year 2000 Ready" not later than October 31, 1999, except to the
extent that failure to do so would not reasonably be expected to have any
materially adverse effect on the business or financial condition of the
Borrower or any of its Subsidiaries considered as a whole.
8.28. Representations Regarding each Project.
--------------------------------------
8.28.1. Condition of Property. As of the date of each
---------------------
Borrower's Requisition submitted by the Borrower with respect to a
Project, except as disclosed therein, (a) neither the Property nor any
portion thereof will have been damaged or injured as a result of any
fire, explosion, accident, flood or other casualty which is not
covered by insurance and which could reasonably be expected to have a
material adverse effect on the economic viability of the Project, (b)
no portion of the Property will be the subject of a Taking which could
reasonably be expected to have a material adverse effect on the
economic viability of the Project, and (c) the Borrower shall not have
received written notice of any contemplated or proposed Taking which
could reasonably be expected to have a material adverse effect on the
economic viability of the Project.
8.28.2. Relevant Contracts. At the time of making any Loan
------------------
Request 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 for by the Plans and
Specifications and all work required to complete the Improvements
(other than work contemplated to be completed by the Borrower's
employees) in accordance with the Plans and Specifications is provided
for under the Construction Contract; (d) all work on the Improvements
shall be completed substantially in accordance with the Plans and
Specifications in a good and workmanlike manner and shall be free of
any material defects; and (e) to the extent the Project is being
constructed on leased Real Estate, that the Borrower is not in
material default of any terms of the lease and that the lease is in
full force and effect. Notwithstanding the foregoing, in the event the
Contractor is in default of its obligations under the Construction
Contract, at the sole option of the Borrower, the Borrower shall have
the right to terminate such Construction Contract and enter into a
substitute or replacement Construction Contract with a new Contractor,
in which event such new Construction Contract shall be assigned to the
Agent and a copy of such new Construction Contract shall be provided
to Agent promptly following the execution thereof.
8.29. 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 such Person in
connection with any of the transactions contemplated by any of the Loan
Documents or the
<PAGE>
-64-
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 taken as a whole 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 (other than general market, economic or geopolitical
conditions) 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.
9. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation or Letter of Credit 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:
9.1. 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.
9.2. 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.
9.3. 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.
9.4. 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
one hundred (100) 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 each of Holdings and
its Subsidiaries and the Borrower and its Subsidiaries, each as at the
end of such year, and the related consolidated statements of income,
and consolidated
<PAGE>
-65-
statements of cash flow and consolidating statements of income and
consolidating statements 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
principles, and such consolidated statements are reported upon without
qualification by a nationally recognized independent certified public
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)11 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)11 of the Credit Agreement,
or, if such accountants shall have obtained knowledge of any then
existing Default or Event of Default under (S)11 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
fifty-five (55) days after the end of each of the fiscal quarters of
the Borrower, copies of the unaudited consolidated balance sheet of
each of Holdings and its Subsidiaries and the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of each of
Holdings and its Subsidiaries and the Borrower and its Subsidiaries,
each as at the end of such quarter, and the related consolidated
statements of income, consolidated statements of cash flow for the
portion of such Person's fiscal year then elapsed, all in reasonable
detail, showing operating contribution on a Stopping Center by
Stopping Center basis and with respect to the Borrower 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 (i) computations
evidencing compliance with the covenants contained in (S)11 and (if
applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date, (ii) an updated
Schedule 8.26 identifying any bank account opened or closed during the
-------------
fiscal quarter then ended (iii) an updated Schedule 8.18 identifying
-------------
any new underground storage tanks located on the Mortgaged Properties,
and (iv) a schedule identifying the actual operating expenses of
Holdings for the fiscal quarter then ended
<PAGE>
-66-
compared to the amounts previously provided in the budget delivered to
the Agent pursuant to (S)9.4(e)(ii).
(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, (i) the budgets of the Borrower and its
Subsidiaries for such year and (ii) the budget of the operating
expenses for such year intended to be distributed to Holdings pursuant
to (S)10.4(c); and
(f) from time to time such other financial data and information
as the Agent or any Bank may reasonably request.
<PAGE>
-67-
9.5. Notices.
-------
9.5.1. 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 $500,000 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.
9.5.2. 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 that would reasonably be
expected 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, 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 would reasonably be expected 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.
9.5.3. 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
$500,000, or the Agent's rights with respect to such Collateral, are
subject, except for Permitted Liens.
9.5.4. 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
<PAGE>
-68-
involving a claim against the Borrower or any of its Subsidiaries as
to which there is a reasonable probability of an adverse determination
and which if adversely determined would 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 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 $500,000.
9.6. 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 its 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)10.4 and (S)10.5. The Borrower (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 such Person 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)9.6
--------
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 such Person, 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)10.5.2 hereof
9.7. 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 8.25 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
<PAGE>
-69-
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 for all Mortgaged Properties
(other than the Mortgaged Property in Corning, California which shall
continue to be subject to an aggregate limit of not less than $5,000,000).
9.8. 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 delinquent, 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.
9.9. Inspection of Properties and Books, etc.
---------------------------------------
9.9.1. 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; provided, that, for all Stopping
--------
Centers, at any time prior to a Default or an Event of Default, the
Agent or such Bank shall give the Borrower prior written notice of
such inspection, the inspection shall occur during daytime business
hours, and the Agent or such Bank shall be accompanied by a designated
officer or director of the Borrower (so long as the Borrower makes
such designated officer or director available at such time).
9.9.2. Commercial Finance Examinations. The Borrower will
-------------------------------
permit the Agent's commercial finance examiners to visit its premises
and conduct an audit of such Person's books and records. The Borrower
agrees to pay the reasonable fees and expenses of such commercial
finance examinations; provided, that absent a Default or an Event of
--------
Default the Borrower shall only be required to pay the fees and
expenses of two (2) commercial finance examinations per year the cost
of such exams in the absence of a Default or an Event of Default not
to exceed $20,000 in the aggregate in any fiscal year.
<PAGE>
-70-
9.9.3. Appraisals. 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)9.9.3 shall be at the sole
discretion of the Agent taking into account applicable laws and
regulatory requirements (including, without limitation, FIRREA), then
existing market conditions, and such other factors as the Agent deem
relevant. Such appraisals will occur no more frequently than once in
any twelve month period, or more frequently as determined by the Agent
if a Default or Event of Default shall have occurred and be
continuing.
9.9.4. Environmental Assessments. The Agent may, at
-------------------------
reasonable times and without unreasonable interference with the
operations of the Borrower, 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 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 provided, that, at any time prior to a Default or an Event of
--------
Default, the Agent shall give the Borrower prior written notice of
such environmental assessment, such assessment shall occur during day
time business hours, and the Agent shall be accompanied by a
designated officer or director of the Borrower (so long as the
Borrower makes a designated officer or director available at such
time). 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. The Agent will not obtain more than one environmental
assessment in any twelve month period for any Mortgaged Property,
unless a Default or Event of Default shall have occurred and be
continuing.
9.10. 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 except as would not 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, and
(d) all applicable decrees, orders,
<PAGE>
-71-
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 such Person 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 such Person to obtain such
authorization, consent, approval, permit or license and furnish the Agent
and the Banks with evidence thereof.
9.11. 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.
9.12. Use of Proceeds. The Borrower will use the proceeds of the
---------------
Revolving Credit Loans and the Term Loans solely to convert the Obligations
under the Original Credit Agreement to Obligations hereunder, to finance
Capital Expenditures, to pay fees and expenses relating to the
Recapitalization and for working capital and general corporate or
partnership purposes. The Borrower will obtain Letters of Credit solely for
general corporate or partnership purposes.
9.13. 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 or which is purchased by the
Borrower or such Subsidiary for an amount in excess of $1,000,000, the
Borrower shall, or shall cause such Subsidiary to, contemporaneously with
the Permitted Acquisition Closing Date, deliver to the Agent a fully
executed mortgage or deed of trust substantially in the form of Exhibit E
------- -
hereto 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,
together with the additional items that the Borrower would be required to
deliver to the Agent pursuant to (S)13.6 hereto if the Borrower were to
request a Revolving Credit Loan to fund such acquisition (excluding the
items described in (S)13.6.2 hereto regarding "Use of Proceeds"), provided,
--------
however, as to any leasehold interest it shall not be a Default or Event of
-------
Default hereunder if the Borrower, after using its best efforts to obtain
any necessary consents, is unable to execute and deliver such leasehold
mortgage or deed of trust due to a failure to obtain any third-party
consents needed to grant such mortgage or deed of trust. 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
<PAGE>
-72-
estate and related personal property, free and clear of all liens and
encumbrances except for Permitted Liens.
9.14. Title Insurance. The Borrower shall deliver to the Agent
---------------
within sixty (60) days of the Closing Date (a) as to each Mortgaged
Property on which a Mortgage is granted on the Closing Date, a Title Policy
covering each such Mortgaged Property; (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.
Until such Title Policies have been delivered, the aggregate outstanding
principal amount of the Loans shall not exceed $115,000,000.
Notwithstanding the foregoing, in the event that the Borrower is unable to
deliver the Title Policies within sixty (60) days, the Agent may, in its
sole discretion, extend the time for such delivery for an additional thirty
(30) days.
9.15. Landlord Consents. Subject to the provisions of (S)9.13 hereof,
-----------------
the Borrower and its Subsidiaries shall deliver to the Agent within sixty
(60) days of the Closing Date 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.
9.16. Survey and Taxes. The Borrower shall deliver to the Agent
----------------
within sixty (60) days of the Closing Date, 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.
Notwithstanding the foregoing, in the event that the Borrower is unable to
deliver the Surveys and the evidence of payment of real estate taxes and
municipal charges within sixty (60) days, the Agent may, in its sole
discretion, extend the time for such delivery for an additional thirty (30)
days.
9.17. Local Counsel Opinions. Within sixty (60) days of the Closing
----------------------
Date, 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 current date,
from 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, in form and substance satisfactory to the Agent
and the Banks. Notwithstanding the foregoing, in the event that the
Borrower is unable to deliver the legal opinions within sixty (60) days,
the Agent may, in its sole discretion, extend the time for such delivery
for an additional thirty (30) days.
<PAGE>
-73-
9.18. Cash Management. At all times after the occurrence and during
---------------
the continuance of an Event of Default, at the request of the Agent, the
Borrower will, and will cause its Subsidiaries to, together with the
employees, agents and other Persons acting on behalf of the Borrower or
such Subsidiary, cause all domestic cash receipts and all payments
constituting proceeds of accounts receivable or other Collateral to be
paid, in the form received, with any appropriate endorsements, into the
account with the Agent or such other account, which shall be subject to an
agency agreement as shall be satisfactory to the Agent.
9.19. 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 fifty
percent (50%) of the principal amount of the Term Loan B 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.
9.20. Cost Overruns. In the event the Borrower becomes aware of any
-------------
change in Property Costs with respect to a Project which will increase the
Project's Construction Budget (as the Construction Budget is revised from
time to time and approved by the Agent) and cause the aggregate
Construction Budget to be increased by more than fifteen percent (15%), the
Borrower shall promptly notify the Agent in writing and promptly submit to
the Agent for its approval a revised Construction Budget. No further
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 reasonable
discretion, such approval or disapproval to be provided by the Agent in a
timely manner.
9.21. 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.
9.22. Deposit of Funds Advanced. The Borrower may, but shall not be
-------------------------
obligated to, open and maintain an account with the Agent into which the
Agent shall deposit the proceeds of each Revolving Credit Loan 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 Revolving Credit Loan 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 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.
9.23. Advances to Contractor. Upon the occurrence and during the
----------------------
continuance of a Default or Event of Default, or upon the request of the
<PAGE>
-74-
Borrower, as the case may be, at its option the Agent may, upon prior
written notice to the Borrower, 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 Revolving Credit Loan. 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.
9.24. Construction Inspector. Upon not less than ten (10) days
----------------------
written notice to the Borrower, the Agent may retain the Construction
Inspector at the cost of the Borrower to perform the following services on
behalf of the Agent;
(a) to review applicable Loan Requests and material change
orders; and
(b) 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 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.
9.25. Completion of Project. Upon the completion of any Project, the
---------------------
Borrower shall deliver to the Agent the following:
(a) final written lien waivers or other evidence satisfactory
to the Agent that no liens exist from (i) the Contractor and (ii) any
subcontractor, supplier or materialman whose aggregate contract amount
is at least $500,000 who is entitled to file a lien which has priority
over the Mortgage or liens under the applicable Security Documents
under applicable state law;
(b) a copy of any certificate of occupancy issued with respect
to the Improvements (to the extent a certificate of occupancy is
required under applicable law);
<PAGE>
-75-
(c) a certificate of the Borrower's Architect (of if there is
no Borrower's Architect, representative 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;
(d) an endorsement to the Title Policy previously issued with
respect to such Project removing any "pending disbursements" or
similar limitations obtained in such Title Policy; and
(e) such other information, documentation and certification as
the Agent shall reasonably request.
9.26. 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.
9.27. Compliance with Environmental Laws. The Borrower will, and
----------------------------------
will cause its Subsidiaries to, (a) use 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 compliance with all applicable Environmental Laws in all
material respects.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------------------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit is outstanding or any Bank has any
obligation to make any Loans or the Agent has any obligations to issue, extend
or renew any Letters of Credit:
10.1. Restrictions on Indebtedness. The Borrower will not, nor will
----------------------------
the Borrower 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 to suppliers in respect of long term supply
contracts consistent with industry practices;
<PAGE>
-76-
(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)9.8;
(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 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 or the Senior
Notes (including without limitation any guarantees of such Senior
Notes by Subsidiaries which are Guarantors);
(g) obligations of the Borrower and its Subsidiaries under
Capitalized Leases; provided that the aggregate principal amount of
--------
all such Indebtedness of the Borrower and its Subsidiaries permitted
pursuant to this (S)10.1(g) shall not exceed the aggregate amount of
$5,000,000 at any one time;
(h) Indebtedness existing on the date hereof and listed and
described on Schedule 10.1 hereto, including the remaining unamortized
-------- ----
portion of the original issue discount of such Indebtedness;
(i) Indebtedness of a Subsidiary of the Borrower which is a
Guarantor existing on the Closing Date to the Borrower or another
Subsidiary of the Borrower which is a Guarantor; 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 or evidenced only by open account;
(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 Senior Notes Indenture and the
Discount 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
<PAGE>
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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 Senior
Notes and the Obligations under this 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)10.1(j);
(o) Indebtedness consisting of guaranties by the Borrower or
any of its Subsidiaries of Indebtedness of the Borrower or any other
Subsidiary which is a Guarantor and is 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 entered into in the
ordinary course of business and not entered into for speculative
purposes;
(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 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 $5,000,000, 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)10.1(r) shall not
exceed the aggregate outstanding principal amount of $12,500,000 at
any time;
<PAGE>
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(s) Indebtedness of the Borrower or any of its Subsidiaries,
as applicable, incurred to refinance and replace Indebtedness of such
Person permitted under clauses (f), (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 Borrower or such
Subsidiary, as applicable, than the similar requirements of the
Indebtedness being refinanced or replaced;
(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 aggregate amount not to exceed
the aggregate outstanding principal amount of $3,000,000;
(u) other Indebtedness not otherwise permitted by this
(S)10.1; provided that the aggregate outstanding principal amount of
--------
all such Indebtedness of the Borrowers, and its Subsidiaries permitted
pursuant to this (S)10.1(u) shall not exceed the aggregate outstanding
principal amount of $2,000,000 at any time;
(v) Indebtedness of the Borrower to Comdata arising out of the
Comdata Agreement, in an amount not to exceed $25,000,000 in the
aggregate at any time; and
(w) Guaranties by the Borrower or any of its Subsidiaries of
Indebtedness in an aggregate amount not to exceed $2,000,000; provided
that the Borrower and its Subsidiaries may guarantee Indebtedness in
an additional amount not to exceed $3,000,000 in the aggregate subject
to a dollar for dollar reduction in the amount of Indebtedness
permitted by (S)10.1(r) for each dollar guaranteed hereunder above
$2,000,000.
10.2. Restrictions on Liens. The Borrower will not, nor will the
---------------------
Borrower 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 (other than Liens on Mortgaged Properties) 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
<PAGE>
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supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of (S)9.8;
(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)10.1(d);
(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)9.8;
(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
--------
10.2 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)10.1(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 $5,000,000 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)10.1(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 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;
<PAGE>
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(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)10.1(g) or
(S)11.5;
(l) Liens in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents;
(m) Liens securing refinancing Indebtedness permitted under
(S)10.1(s) 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 (other than Liens on Mortgaged Properties) 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)10.1(l) hereof;
(q) interest of lessees under leases;
(r) Liens on equipment purchased as permitted by (S)10.1(t)
hereof; and
(s) Liens on assets sold which were created solely by virtue of
an asset sale permitted by (S)10.5.2.
10.3. Restrictions on Investments. The Borrower will not, nor will
---------------------------
the Borrower 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;
<PAGE>
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(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 10.3 hereto;
-------- ----
(e) Investments with respect to Indebtedness permitted by
(S)10.1(i) and (j) so long as such entities remain Subsidiaries of the
Borrower and Guarantors 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)10.1(i) or evidenced only by open
account;
(f) Investments consisting of the Guarantees, or Investments by
the Borrower in Subsidiaries of the Borrower existing on the Closing
Date, or Investments with respect to Indebtedness permitted by
(S)10.1(o), Investments by Petro Distributing or Petro Financial in
the Old Notes, and Investments by Petro Distributing, Petro Financial
or any other Subsidiary in respect of the Senior Notes;
(g) Investments consisting of noncash proceeds of asset
dispositions permitted by (S)10.5.2;
(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 (other than
Capital Expenditures in respect of Capital Assets which are capital
stock or other equity interests);
(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
<PAGE>
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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 $7,500,000 at any time
plus, to the extent the Borrower would be permitted to make a
----
Distribution pursuant to (S)10.4(a), the amount the Borrower would be
permitted to make pursuant to (S)10.4(a) 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;
(o) Investments in respect of interest rate swaps, caps, collars
and similar agreements and fuel swaps in each case permitted
hereunder; and
(p) Investments by the Borrower in respect of the purchase by
the Borrower of the Capital Interests or assets of any Person, so long
as (i) if Capital Interests such an acquisition is permitted by
(S)10.5.1 hereof; (ii) such Person shall become a Wholly-Owned
Subsidiary or Non-Wholly Owned Subsidiary and a Guarantor (unless such
Person is an Immaterial Subsidiary), and (iii) 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.
10.4. Distributions. The Borrower will not make any Distributions
-------------
other than Tax Distributions; provided, however, so long as no Default or
-------- -------
Event of Default has occurred and is continuing or would exist as a result
thereof, the Borrower shall be permitted to make the following:
(a) 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 payment is not greater than 3.00:1.00, the
Borrower shall be permitted to make payments to Holdings to permit Holdings
to make Distributions on Holdings' limited partnership interests in an
amount not to exceed in the aggregate in any fiscal year, twenty percent
(20%) of the result of (i) the Consolidated Net Income of the Borrower for
such fiscal year minus (ii) Tax Distributions made by the Borrower with
-----
respect to such fiscal year;
(b) to Holdings in any fiscal year in an aggregate amount equal to
the amount of interest Holdings is required to pay on the Discount Notes in
such fiscal year solely for the purpose of making such interest payments,
provided that no such payments shall be permitted until after July 23,
--------
2004;
<PAGE>
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(c) payments to Holdings to enable Holdings to pay reasonable
operating expenses incurred in the ordinary course of business, provided
--------
that the expected amounts shall be detailed in an annual budget with such
budgeted amounts to be reasonably approved by the Agent and the actual
operating expenses shall be reconciled with such budget on a quarterly
basis and reported pursuant to (S)9.4(c) hereto, provided, further, that if
--------
the actual operating expenses are in excess of such budgeted amounts, such
excess operating expenses shall be subject to the approval of (i) the
Agent, if the aggregate excess amount is no more than twenty percent (20%)
of the budgeted amount and (ii) the Majority Banks, if the aggregate excess
amount is greater than twenty percent (20%) of the budgeted amount; and
(d) payments to Holdings solely for the purpose of payments to
management for the repurchase of Capital Interests in Holdings required or
permitted under the terms of employment contracts or option plans provided
that such payments shall not exceed $1,000,000 in the aggregate in the
period from the Closing Date through July 23, 2002 and $5,000,000 in the
aggregate thereafter.
10.5. Merger, Consolidation and Disposition of Assets.
-----------------------------------------------
10.5.1. Mergers and Acquisitions. The Borrower will not, nor
------------------------
will the Borrower 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 (which
may include unimproved real estate) in the ordinary course of business
consistent with past practices; (c) other asset or stock acquisitions
of Persons in the same or a similar line of business (i.e. the truck
stop and stopping center business, services supporting the trucking
and travel plaza industry and diesel and gas fueling operations) as
the Borrower or its Subsidiary (collectively with the acquisitions
permitted by paragraphs (a) and (b) hereof, the "Permitted
Acquisitions") where (i) the Borrower has provided the Agent with five
(5) Business Days prior written notice of such Permitted Acquisition,
which notice shall include a reasonably detailed description of such
Permitted Acquisition and the material documents, agreements and
instruments to be entered into in connection with such 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)10.2 hereof) and all Indebtedness (other than as permitted by
(S)10.1 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
Permitted Acquisition (other than Permitted Liens) and, to the extent
applicable, has provided the Agent with all documents, agreements and
information required pursuant to
<PAGE>
-84-
(S)9.13 hereof; (v) the Borrower has demonstrated to the reasonable
satisfaction of the Agent, based on a pro forma Compliance
--- -----
Certificate, compliance with (S)11 hereof on a Pro Forma Basis
immediately prior to and after giving effect to such 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
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 (2) 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, such new Subsidiary
shall (unless such new Subsidiary is an Immaterial Subsidiary),
simultaneously with such acquisition, become a guarantor of the
Obligations and grant to the Agent for the benefit of the Agent and
the Banks a first priority perfected lien on all of its assets.
In the event any new Domestic Subsidiary (other than an
Immaterial Subsidiary) is formed as a result of or in connection with
any acquisition, simultaneously therewith, the Loan Documents shall be
amended and/or supplemented as necessary to make the terms and
conditions of the Loan Documents applicable to such Subsidiary. In
the case of the Borrower forming or purchasing such Domestic
Subsidiary, such Domestic Subsidiary (other than an Immaterial
Subsidiary) shall become a guarantor hereunder, and shall grant to the
Agent for the benefit of the Banks a perfected, first priority
security interest in its assets, in accordance with the terms of the
Security Agreement and the other Security Documents.
10.5.2. Disposition of Assets. The Borrower will not, nor will
---------------------
the Borrower 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)10.3(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 third parties which are not Affiliates in an arms-length
transaction for fair and reasonable value; (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)10.5.1
hereof, (ii) the Borrower or such Subsidiary has complied with all the
covenants and requirements contained herein as if such acquisition was
a Permitted Acquisition; and (iii) such Asset Swap is also considered
an "Asset Swap"
<PAGE>
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pursuant to the Senior Notes 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)10.5.2, 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 in
excess of $3,000,000 pursuant to this (S)10.5.2 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.
Notwithstanding anything to the contrary contained in this
(S)10.5.2, (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 Senior Notes pursuant to (S)4.9 of the Senior
Notes Indenture prior to the repayment in full of all the Obligations,
or would violate the provisions of (S)4.9 of the Senior 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 expressly permitted in this (S)10.5.2, 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).
10.6. Sale and Leaseback. The Borrower will not, nor will the
------------------
Borrower 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
<PAGE>
-86-
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, unless such property is sold to an unaffiliated
third party for fair and reasonable value in cash in accordance with
(S)10.5.2 and the Indebtedness incurred in connection therewith is
permitted under (S)10.1(g).
10.7. Employee Benefit Plans. Neither the Borrower nor any ERISA
----------------------
Affiliate will:
(a) knowingly engage in any nonexempt "prohibited transaction"
within the meaning of (S)406 of ERISA or (S)4975 of the Code which
would reasonably be expected to 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, in
excess of $1,000,000, 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 by more than $1,000,000, disregarding for this
purpose the benefit liabilities and assets of any such Plan with
assets in excess of benefit liabilities.
10.8. Transactions with Affiliates. The Borrower will not, nor will
----------------------------
the Borrower 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 10.8 hereto, (b)
-------- ----
transactions which are on terms no less favorable to such Person than such
Person could obtain in arms-length transactions from third parties which
are not Affiliates, (c) 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 (d)
Distributions to the extent permitted by (S)10.4 hereof.
10.9. No Changes to Old Notes, Senior Notes or Discount Notes. The
--------------------------------------------------------
Borrower will not amend any provisions of the Old Notes, the Old Indenture,
the Senior Notes or the Senior Notes Indenture, the Discount Notes or the
Discount 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.
10.10. Fiscal Year. The Borrower will not change the date of the end
-----------
of its fiscal year from that referred to in (S)8.22 hereof.
<PAGE>
-87-
10.11. 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 Discount Notes and the
Discount 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)10.2.
10.12. 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.
10.13. Inconsistent Agreements. The Borrower will not, nor will the
-----------------------
Borrower permit any of its Subsidiaries to, enter into any agreement
containing any provision which would be violated or breached by the
performance by the Borrower or such Subsidiary of its obligations hereunder
or under any of the Loan Documents.
10.14. 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 $7,500,000 in the aggregate; provided, however, for
-------- -------
purposes of this (S)10.14, 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)10.14.
11. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation or Letter of Credit 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:
11.1. 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:
<PAGE>
-88-
<TABLE>
<CAPTION>
--------------------------------------------------------------
Period Ratio
------ -----
--------------------------------------------------------------
<S> <C>
Closing Date through June 29, 2002 5.00:1.00
--------------------------------------------------------------
June 30, 2002 through June 29, 2003 4.50:1.00
--------------------------------------------------------------
Thereafter 4.00:1.00
--------------------------------------------------------------
</TABLE>
11.2. 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 Worth reported in the Borrower's pro forma balance sheet
--- -----
as of the Closing Date 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, 1999 plus
----
(c) accrued dividends paid after the Closing Date in additional Capital
Interests less Distributions paid pursuant to (S)10.4(a) 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.
11.3. 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>
Closing Date through 6/29/02 1.25:1.00
-------------------------------------------------------------------
6/30/02 through 6/29/03 1.00:1.00
-------------------------------------------------------------------
6/30/03 through 6/29/04 1.10:1.00
-------------------------------------------------------------------
Thereafter 1.25:1.00
-------------------------------------------------------------------
</TABLE>
11.4. 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:
-------------------------------------------------------------------
Fiscal Quarter Ending Ratio
--------------------- -----
-------------------------------------------------------------------
<PAGE>
-89-
<TABLE>
<S> <C>
Closing Date through 6/29/02 2.00:1.00
-------------------------------------------------------------------
6/30/02 through 6/29/03 2.25:1.00
-------------------------------------------------------------------
6/30/03 through 6/29/04 2.50:1.00
-------------------------------------------------------------------
Thereafter 2.75:1.00
-------------------------------------------------------------------
</TABLE>
11.5. 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 $10,000,000 in
any fiscal year.
12. CLOSING CONDITIONS.
------------------
The obligations of the Banks to make the initial Revolving Credit Loans and
the Term Loan B and of the Agent to issue any initial Letters of Credit shall be
subject to the satisfaction of the following conditions precedent:
12.1. Loan Documents, etc.
-------------------
12.1.1. 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.
12.1.2. 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.
12.1.3. Discount Notes. Each of the Discount Notes and the
--------------
Discount 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.
12.2. 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,
Petro Distributing and the respective 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.
<PAGE>
-90-
12.3. 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.
12.4. 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 such
Person, 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 such Person, each of the Loan Documents to which such Person is
or is to become a party; (b) in the case of the Borrower, to make Loan
Requests and Conversion Requests and to apply for Letters of Credit; and
(c) to give notices and to take other action on its behalf under the Loan
Documents.
12.5. 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.
12.6. 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 otherwise in form and substance satisfactory to the
Agent.
12.7. 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 8.25 hereto 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).
12.8. FEMA Certification. The Agent shall have received a FEMA
------------------
certification from the Title Insurance Company with respect to each
Mortgaged Property as to which a survey is not available as of the Closing
Date on which a Mortgage is granted on the Closing Date.
12.9. 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 each of (a) Gibson, Dunn & Crutcher, LLP, counsel
to the
<PAGE>
-91-
Borrower and its Subsidiaries, and (b) Kemp, Smith, Duncan & Hammond, P.C.,
counsel to the Borrower and Petro Inc.
12.10. 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, 6.1.1 and 6.1.2.
12.11. Solvency Certificate. The Agent shall have received a
--------------------
certificate in form and substance satisfactory to the Agent from the
Borrower's chief financial officer as to solvency of the Borrower and its
Subsidiaries.
12.12. Consent Under Senior Indenture. The Agent shall have received
------------------------------
evidence satisfactory to the Agent that the Borrower has received the
consent in accordance with the Consent Documents of holders holding more
than fifty-one percent (51%) of the aggregate outstanding principal amount
of the Senior Notes.
12.13. Discount Notes. The Agent shall have received evidence
--------------
satisfactory to the Agent that the Discount Notes have been issued in
accordance with the terms of the Discount Notes Indenture in an aggregate
amount of not more than $55,600,000 and Holdings has received at least
$40,000,000 of the gross proceeds of such issuance in cash and Discount
Notes with an accreted value of $14,830,000 have been issued to Chartwell
in partial payment of the purchase price in the Chartwell Purchase
Agreement.
12.14. 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 in all material respects
without recourse to any provision permitting the waiver by any party
thereto of any condition, obligation, covenant or other requirement.
12.15. Completion of Recapitalization. The Recapitalization shall
------------------------------
have been completed pursuant to the Recapitalization Documents.
12.16. No Material Adverse Change. The Agent and the Banks shall be
--------------------------
satisfied that no material adverse change in the business, assets,
arrangements or financial condition, income or prospects of the Borrower
and its Subsidiaries taken as a whole has occurred prior to the Closing
Date.
12.17. Capitalization. The Agent and the Banks shall have received
--------------
evidence satisfactory to the Agent and the Banks that Holdings has received
not less than (a) $30,000,000 in proceeds from the issuance of equity to
Volvo; (b) $5,000,000 in proceeds from the issuance of equity to Mobil; and
(c) $40,000,000 in cash proceeds from the issuance of the Discount Notes by
Holdings.
12.18. 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 $10,000,000 in the aggregate.
<PAGE>
-92-
12.19. 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.
12.20. Pro Forma Balance Sheet. The Agent shall have received a
-----------------------
satisfactory pro forma balance sheet as of the Balance Sheet Date.
12.21. Pro Forma Compliance Certificate. The Agent shall have
--------------------------------
received a compliance certificate setting forth in reasonable detail
computations evidencing compliance with the covenants set forth in (S)11 as
of the Closing Date and for the twelve-month period most recently ended.
13. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Loan, including the Revolving
Credit Loans and the Term Loan 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:
13.1. Representations True; No Event of Default. Each of the
-----------------------------------------
representations and warranties 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 in all material respects 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.
13.2. 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.
13.3. 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.
13.4. 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
<PAGE>
-93-
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.
13.5. Indenture Compliance. The Agent shall have received a
--------------------
certificate from the Borrower certifying that the Loan being requested may
be incurred in compliance with the covenants set forth in (S)4.6 of the
Discount Notes Indenture and (S)4.6 of the Senior Notes Indenture, together
with such evidence and calculations demonstrating the satisfaction of such
covenant as the Agent may reasonably request.
13.6. Conditions to Revolving Credit Loans for Permitted
--------------------------------------------------
Acquisitions.
------------
13.6.1. Acquisition Documents. Not less than five (5) Business
---------------------
Days prior to the scheduled Permitted Acquisition Closing Date, the
Agent shall have received (a) written notification of the Permitted
Acquisition, together with copies of all then current drafts of the
material documents to be entered into in connection with such
Permitted Acquisition, (b) a written statement from the Borrower
indicating (i) the purchase price of such Permitted Acquisition and
the Borrower's good faith estimate of all additional Property Costs
for the Project to be constructed thereon, and (ii) that to the best
of the Borrower's knowledge, the proposed Permitted Acquisition will
not result in a Default or Event of Default under this Credit
Agreement, and (c) a pro forma compliance certificate, evidencing
---------
compliance with (S)11 hereof on a pro forma basis immediately prior to
---------
and after giving effect to the requested Revolving Credit Loan.
13.6.2. Use of Proceeds. The Agent shall have received evidence
---------------
that the Borrower has used the proceeds of each applicable Revolving
Credit Loan requested solely to finance the purchase price and related
transaction costs of each Permitted Acquisition for which such
Revolving Credit Loan is being requested, and the Borrower is in
compliance with (S)9.12 hereof.
13.7. Conditions to Revolving Credit Loans for Permitted Acquisitions
---------------------------------------------------------------
of Real Estate.
--------------
In addition to the conditions precedent applicable to all Revolving
Credit Loans hereunder, the obligations of the Banks to make any Revolving
Credit Loan for a Permitted Acquisition involving Real Estate, shall be
subject to the following conditions precedent:
13.7.1. Environmental Matters. Not less than five (5) Business
---------------------
Days prior to the scheduled Permitted Acquisition Closing Date, the
Agent shall have received a copy of each environmental assessment
obtained by the Borrower with respect to the Real Estate to be
acquired.
13.7.2. Survey and Title. The Agent shall have received a
----------------
Survey of the Real Estate to be acquired, together with a Surveyor
Certificate, and to the extent that the Borrower is required to
deliver a
<PAGE>
-94-
Mortgage with respect to such Real Estate pursuant to (S)9.13 hereof,
the Agent shall have received a current commitment from the Title
Insurance Company to issue a Title Policy covering such Real Estate,
the Borrower shall have paid all premiums applicable to such Title
Policy, and the Title Insurance Company shall have agreed to deliver
the Title Policy to the Agent within sixty (60) days of the Permitted
Acquisition Closing Date.
13.7.3. Mortgage. To the extent required pursuant to (S)9.13
--------
hereof, the Agent shall have received an executed Mortgage covering
the Real Estate to be acquired, in form sufficient for recording, 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.
13.7.4. Local Counsel Opinion. To the extent a Mortgage is
---------------------
required to be delivered by the Borrower, the Agent shall have
received a favorable legal opinion addressed to the Banks and the
Agent, dated as of the Permitted Acquisition Closing Date, from local
counsel to the Borrower in the state where the Mortgaged Property is
located, substantially similar in all material respects to the local
counsel opinions delivered in connection with the Mortgaged Properties
for which Mortgages were granted on the Closing Date.
13.7.5. Insurance. The Agent shall have received an updated
---------
Certificate of Insurance evidencing maintenance of the policies of
insurance required hereby.
13.7.6. Use of Proceeds. The Agent shall have received
---------------
reasonably satisfactory evidence that the proceeds of the requested
Revolving Credit Loan will be used for the Permitted Acquisition and
otherwise in accordance with (S)9.12.
13.8. Conditions to Revolving Credit Loans for Construction. In
-----------------------------------------------------
addition to the conditions precedent applicable to all Revolving Credit
Loans hereunder, the obligations of the Banks to make any Initial Project
Loan with respect to any Project shall be subject to the following
additional conditions precedent.
13.8.1. Borrower's Requisition. The Borrower, in addition to
----------------------
complying with 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 (a) the total amount of the
Revolving Credit Loan being requested, together with an explanation in
sufficient detail as to the application of the proceeds of such
Revolving Credit Loan, as well as the total amount currently due and
payable (set forth in an itemized format) on the Project for which the
Revolving Credit Loan is requested, and (b) such other information and
documentation as the Agent shall reasonably request.
13.8.2. Construction Documents. The Architects' Contract and the
----------------------
Construction Contract to which such applicable Revolving Credit
<PAGE>
-95-
Loan for such Project, 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. The 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 the Construction Contract, and the Agent
shall have received the original or a fully executed counterpart
thereof.
13.8.3. Other Contracts. Upon the request of the Agent, the
---------------
Borrower shall have delivered to the Agent correct and complete
photocopies of all other material executed contracts with contractors,
subcontractors, materialmen, engineers or consultants for the Project,
and of all development and management, agreements for the Project.
13.8.4. Construction Budget. The Borrower shall have delivered
-------------------
the Construction Budget to the Agent.
13.8.5. Construction Schedule. The Borrower shall have
---------------------
delivered the Construction Schedule to the Agent.
13.8.6. Plans and Specifications. Upon the request of Agent, a
------------------------
complete set of the Plans and Specifications and evidence
demonstrating that such Plans and Specifications have been approved by
all necessary governmental authorities (if any). In addition, for all
Initial Project Loans, a certification from the Borrower's Architect
(or, if there is not a Borrower's Architect, a representative of the
Borrower responsible for the Project) that to the best of the party's
knowledge, the Improvements to be constructed comply with all
requirements and governmental approvals.
13.8.7. Mortgage. To the extent not previously provided, and to
--------
the extent required pursuant to (S)9.13 hereof, the Agent shall have
received an executed Mortgage covering Real Estate included in such
Project, in form sufficient for recording, 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.
13.8.8. Title Policy. To the extent not previously provided, and
------------
to the extent a Mortgage is required pursuant to (S)9.13 hereof, the
Agent shall have received a current commitment from the Title
Insurance Company to issue a Title Policy covering such Real Estate
and the Borrower shall have paid all premiums applicable to such Title
Policy, and the Title Insurance Company shall have agreed to deliver
the Title Policy to the Agent within sixty (60) days of the Permitted
Acquisition Closing Date.
13.8.9. Other Insurance. The Agent shall have received an
---------------
updated certificate evidencing the policies of all insurance required
by this Credit Agreement for such Project
13.8.10. Pro Forma Compliance.. The Agent shall have received
--------------------
a pro forma compliance certificate, evidencing compliance with (S)11
----------
<PAGE>
-96-
hereof on a Pro Forma Basis immediately prior to such Revolving Credit
Loan and immediately after giving effect to the aggregate amount of
Revolving Credit Loans required to finance all Project Costs with
respect to such Project.
13.8.11. Environmental Report. Not less than five (5) Business
--------------------
Days prior to the Initial Project Loan, the Agent shall have received
a copy of each environmental assessment obtained by the Borrower with
respect to the Real Estate included in such Project and not previously
delivered to the Agent.
13.8.12. Legal Opinions. To the extent a Mortgage is required
--------------
pursuant to (S)9.13, 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 is occurring and for which a Mortgage is being granted.
13.8.13. Lien Search. The Agent shall have received the results
-----------
of UCC searches with respect to the Project, indicating that no liens,
encumbrances, security interests, financing statements or title
retention agreements which affect the Property, other than Permitted
Liens.
13.8.14. Notices. All notices required by any governmental
-------
authority or by any applicable legal requirement to be filed prior to
commencement of construction of the Improvements shall have been
filed.
13.8.15. Appraisal. To the extent determined by the Agent to be
---------
required by or advisable under applicable regulatory requirements,
prior to the initial Revolving Credit Loan for any Project, an
appraisal of the Property, including an appraisal of the Property on
an as completed basis.
13.9. Conditions to Revolving Credit Loans for Improvements
-----------------------------------------------------
Subsequent to an Initial Project Loan. In addition to the conditions
-------------------------------------
precedent applicable to all Revolving Loans hereunder, the obligations of
the Banks to make Revolving Loans for Property Costs for a Project after
the Initial Project Loan has been made shall be subject to the following
additional conditions precedent:
13.9.1. Borrower's Requisition. The Borrower shall have
----------------------
delivered to the Agent a complete, executed Borrower's Requisition.
13.9.2. No Damage. At the time of any Revolving Credit Loan, the
---------
Improvements shall not have been injured or damaged by fire,
explosion, accident, flood or other casualty, unless either (a)
pursuant to the Mortgage encumbering such Project, the proceeds of any
hazard insurance to be disbursed have been disbursed directly to the
Borrower, or (b) 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.
<PAGE>
-97-
13.9.3. Certificate. If requested by the Agent, a
-----------
certificate of the Construction Inspector in the form of Exhibit
-------
P.
-
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
14.1. 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, 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)9 (other than the covenants contained
in (S)9.2, (S)9.4, the second sentence of (S)9.6, (S)9.8, (S)9.11
and (S)9.27 (but only to the extent the Borrower or its
Subsidiary has taken all action necessary to remediate the
violation and such remediation is possible without any material
adverse effect on the Borrower and its Subsidiaries)), (S)10
(other than the covenant contained in (S)10.2, 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) or (S)11 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)9.4 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)14.1) 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;
<PAGE>
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(g) a default or an event of default shall occur with
respect to the Discount Notes;
(h) a default or an event of default shall occur with
respect to the Old Notes or the Senior 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 $1,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement 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 such Person or of any substantial part of the assets
of such Person or shall commence any case or other proceeding
relating to such Person 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 such Person and such Person shall
indicate its approval thereof, consent thereto or acquiescence
therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing
thereof;
(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 such Person
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 (30) days, whether or not
consecutive, any final judgment against the Borrower or any of
its Subsidiaries that, with other outstanding final judgments,
undischarged, against such Person exceeds insurance coverage
applicable thereto for which the relevant insurance carrier has
accepted liability by $1,000,000 or more, in the aggregate;
<PAGE>
-99-
(m) (i) the holders of all or any part of the Old Notes,
the Senior Notes or the Discount Notes shall accelerate the
maturity of all or any part of such Old Notes, Senior Notes or
Discount Notes, as the case may be, or (ii) the Old Notes, the
Senior Notes or the Discount Notes shall be prepaid, redeemed or
repurchased in whole or in part or the holders shall have the
right to require such Old Notes, Senior Notes or Discount Notes,
as the case may be, 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 Agent (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 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
would reasonably 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
$1,000,000 and such event in the circumstances occurring would
reasonably be expected to 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 would 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
<PAGE>
-100-
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 would 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;
(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 would
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; 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 such Person, a punishment for
which in any such case could include the forfeiture of any assets
of such Person having a fair market value in excess of
$1,000,000;
then, if such event is an Event of Default, and 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 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)14.1(j),
14.1(k) or (S)14.1(m) (but only as (S)14.1(m) pertains to the
acceleration of the Senior Notes or the Discount Notes), all such
amounts shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any Bank.
14.2. Termination of Commitments. If any one or more of the
--------------------------
Events of Default specified in (S)14.1(j), (S)14.1(k) or (S)14.1(m)
(but only as (S)14.1(m) pertains to the acceleration of the Senior
Notes or the Discount Notes) shall occur, any unused portion of the
Total 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
hereunder, and upon such notice being given such unused portion of the
Total Commitment hereunder shall terminate immediately and each of the
Banks shall be relieved of all further obligations to make Loans and
the Agent shall be relieved of all further obligations to issue,
extend or renew Letters of Credit. No termination of the Total
Commitment hereunder shall relieve Holdings, the Borrower or any of
its Subsidiaries of any of the Obligations (other than as provided in
(S)2.3).
<PAGE>
-101-
14.3. 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)14.1,
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 Loans 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 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.
14.4. 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)6.2 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
<PAGE>
-102-
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.
15. 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, such amount shall be
applied ratably to such other Indebtedness 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
constituting 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 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 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 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.
16. THE AGENT.
---------
16.1. 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. Neither
<PAGE>
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the Co-Agent nor the Documentation Agent shall have any duties or
responsibilities under this Credit Agreement.
(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 security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the
Banks and the Agent.
16.2. 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.
16.3. 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.
16.4. No Representations.
------------------
16.4.1. General. The Agent shall not be responsible for the
-------
execution or validity or enforceability of this Credit Agreement, 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 Obligations, or for the value of any such collateral
security or for the validity, enforceability or collectibility of any
such amounts owing with respect to the Obligations, 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
<PAGE>
-104-
Obligations 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 Bank 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.
16.4.2. Closing Documentation, etc. For purposes of
--------------------------
determining compliance with the conditions set forth in (S)12, each
Bank that has executed this Credit Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each
document and matter sent by the Agent or the Arranger to, and received
by, such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Bank, unless an officer of the Agent or the
Arranger active upon the Borrower's account shall have received notice
from such Bank prior to the Closing Date specifying such Bank's
objection thereto and such objection shall not have been withdrawn by
notice to the Agent or the Arranger to such effect on or prior to the
Closing Date.
16.5. Payments.
--------
16.5.1. 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 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.
16.5.2. Distribution by Agent. If in the opinion of the Agent
---------------------
the distribution of any amount received by it in such capacity
hereunder or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to
make distribution shall have been adjudicated by a court of competent
jurisdiction. 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.
16.5.3. Delinquent Banks. Notwithstanding anything to the
----------------
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Loan or to purchase any Letter of Credit
--- ----
Participation
<PAGE>
-105-
or (b) to comply with the provisions of (S)15 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.
16.6. Holders. The Agent may deem and treat 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.
16.7. Indemnity. The Banks ratably agree hereby to indemnify and hold
---------
harmless the Agent and its affiliates 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 or such
affiliate 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 Agreement (including without limitation (S)16.5.2) 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 or such affiliate's willful misconduct or gross negligence.
16.8. Agent as Bank. In its individual capacity, BKB 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 purchaser of any Letter
of Credit Participations, as it would have were it not also the Agent.
16.9. 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
<PAGE>
-106-
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 having a rating of not less than A
or its equivalent by Standard & Poor's Corporation. 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.
16.10. 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)16.10 it shall
promptly notify the other Banks of the existence of such Default or Event
of Default.
16.11. 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 compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
17. 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)6.3, 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)6) 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,
<PAGE>
-107-
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, 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)17
shall survive payment or satisfaction of all other Obligations.
18. INDEMNIFICATION.
---------------
The Borrower agrees to indemnify and hold harmless the Arranger, 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 bad faith, gross negligence or willful
misconduct of, or violation of any law or regulation by, any such indemnified
person). Notwithstanding the foregoing the Borrower shall not be
<PAGE>
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obligated to indemnify any such Person from any loss resulting from a dispute
solely between or among the Banks and any dispute between the Agent and a Bank
in which the Agent has been finally determined by a non-appealable court of
competent jurisdiction to have acted with gross negligence or willful
misconduct. 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)18 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)18 shall survive payment or
satisfaction in full of all other Obligations.
19. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
---------------------------------------------
19.1. Sharing of Information with Section 20 Subsidiary. The Borrower
-------------------------------------------------
acknowledges that from time to time financial advisory, investment banking
and other services may be offered or provided to the Borrower or one or
more of their Subsidiaries, in connection with this Credit Agreement or
otherwise, by a Section 20 Subsidiary. The Borrower, for itself and each of
its Subsidiaries, hereby authorizes (a) such Section 20 Subsidiary to share
with the Agent and each Bank any information delivered to such Section 20
Subsidiary by the Borrower or any of their Subsidiaries, and (b) the Agent
and each Bank to share with such Section 20 Subsidiary any information
delivered to the Agent or such Bank by the Borrower or any of their
Subsidiaries pursuant to this Credit Agreement, or in connection with the
decision of such Bank to enter into this Credit Agreement; it being
understood, in each case, that any such Section 20 Subsidiary receiving
such information shall be bound by the confidentiality provisions of this
Credit Agreement. Such authorization shall survive the payment and
satisfaction in full of all of Obligations.
19.2. Confidentiality. Each of the Banks and the Agent agrees, on
---------------
behalf of itself and each of its affiliates, directors, officers, employees
and representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential
information of the same nature and in accordance with safe and sound
banking or investing practices, any non-public information supplied to it
by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement that is identified by such Person as being confidential at the
time the same is delivered to the Banks or the Agent, provided that nothing
--------
herein shall limit the disclosure of any such information (a) after such
information shall have become public other than through a violation of this
(S)19, (b) to the extent required by statute, rule, regulation or judicial
process, (c) to counsel for any of the Banks or the Agent, (d) to bank
examiners or any other regulatory authority having jurisdiction over any
Bank or the Agent, or to auditors or accountants, (e) to the
<PAGE>
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Agent, any Bank or any Section 20 Subsidiary, (f) reasonably required in
connection with any litigation to which any one or more of the Banks, the
Agent or any Section 20 Subsidiary is a party, or in connection with the
enforcement of rights or remedies hereunder or under any other Loan
Document, (g) to a Subsidiary or affiliate of such Bank as provided in
(S)19.1 (h) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by
the provisions of (S)21.6, or (i) to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by
the provisions of this (S)19.2; provided, that, should disclosure of any
--------
such confidential information be required by virtue of either clause (b) or
(d) hereof, 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.
19.3. Prior Notification. Unless specifically prohibited by
------------------
applicable law or court order, each of the Banks and the Agent shall, prior
to disclosure thereof, notify the Borrower in writing of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Bank by such governmental
agency) or pursuant to legal process.
19.4. Other. In no event shall any Bank or the Agent be obligated or
-----
required to return any materials furnished to it or any Section 20
Subsidiary by the Borrower or any of its Subsidiaries. The obligations of
each Bank under this (S)19 shall supersede and replace the obligations of
such Bank under any confidentiality letter in respect of this financing
signed and delivered by such Bank to the Borrower prior to the date hereof
and shall be binding upon any assignee of, or purchaser of any
participation in, any interest in any of the Loans or Reimbursement
Obligations from any Bank.
20. SURVIVAL OF COVENANTS, ETC.
--------------------------
All covenants, agreements, representations and warranties made herein, 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 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 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)9, 10
and 11 shall remain in full force and effect for so long as any Loan, Unpaid
Reimbursement Obligation or Letter of Credit is outstanding or
<PAGE>
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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.
21. ASSIGNMENT AND PARTICIPATION.
----------------------------
21.1. 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 Loan A and Term Loan B and the same portion of
the Loans at the time owing to 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 (other than an assignment between any fund and its affiliated
funds), 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 Loan A or Term Loan
B, as applicable, 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 or Term Loan B, as applicable, 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 the Notes, if any, 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 other Prescribed Forms (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) 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)21.3, be released from its obligations
under this Credit Agreement.
<PAGE>
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21.2. 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)8.4 and (S)9.4 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;
(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;
<PAGE>
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(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.
21.3. 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.
21.4. New Notes. Upon its receipt of an Assignment and Acceptance
---------
executed by the parties to such assignment, together with each Note (if
any) 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). Upon the
request of such Eligible Assignee, the Borrower shall, within five (5)
Business Days after receipt of such request and, at its own expense,
execute and deliver to the Agent, 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 (if so
requested by the assigning Bank) to the order of the assigning Bank in an
amount equal to the amount retained by it hereunder. Such new Notes (if
any) 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
Assignment and Acceptance and shall otherwise be substantially in the form
of the assigned Notes.
21.5. 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 shall be in an amount of not less
--------
than $5,000,000, (b) any such sale or participation shall not affect the
rights and duties of the selling Bank hereunder to the Borrower or of the
Borrower to such Bank or give rise to any Obligation of the Borrower to
such participant, 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
<PAGE>
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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.
21.6. 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.
21.7. 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)14.1 or (S)14.2, 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)14.1 or (S)14.2 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.
21.8. Miscellaneous Assignment Provisions. Any assigning Bank shall
-----------------------------------
retain its rights to be indemnified pursuant to (S)18 with respect to any
claims or actions arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the 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
<PAGE>
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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)21 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 Loans) (a) to any of the twelve Federal Reserve
Banks organized under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341 and
(b) any Bank that is a fund that invests in bank loans may at any time
pledge all or any portion of its interests and rights with respect to its
Loans to any trustee for, or any other representative of, holders of
obligations owed or securities issued by such fund as security for such
obligations or securities, provided that any foreclosure or similar action
--------
by such trustee or other representative shall be subject to the other
provisions of this (S)21. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
21.9. 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.
21.10. 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.
22. 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 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 Holdings or the Borrower, at 6080 Surety Drive, El Paso,
Texas 79905, Attention: each of V.P. Finance and General Counsel; with a
copy to Gibson, Dunn & Crutcher, LLP, 200 Park Avenue, New York, New York
10166, Attention: Janet Vance or at such other address for notice as such
Person 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: Stephen J. Carll, 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
(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.
<PAGE>
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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.
23. 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)22. 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.
24. HEADINGS.
--------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
25. 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.
26. 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)28.
27. WAIVER OF JURY TRIAL.
--------------------
<PAGE>
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Each of the Banks and 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 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.
28. 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 Loans,
extension of maturities of the Loans, extension of any date fixed for payment, a
change in the amount of the Commitments of the Banks or a change in the amounts
of the Term Loans, the method of application of proceeds under (S)4.4 and
(S)14.2, 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)10.5.2), the termination of 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)28 may not be amended and no Guarantor may be may
be released 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)16 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 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.
<PAGE>
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29. 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.
30. 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 Loans, 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.
31. TRANSITIONAL ARRANGEMENTS.
-------------------------
31.1. 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)31. 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.
31.2. Return and Cancellation of Notes. Contemporaneously with its
--------------------------------
receipt of any Revolving Credit Note and Term Note hereunder, 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.
31.3. 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>
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: ______________________________________
Name:
Title:
BANKBOSTON, N.A. (formerly known as The First National
Bank of Boston), individually and as Agent
By: ______________________________________
Name:
Title:
<PAGE>
UNION BANK OF CALIFORNIA, N.A.,
individually and as Co-Agent
By:________________________________________
Name:
Title:
<PAGE>
FIRST UNION NATIONAL BANK, individually
and as Documentation Agent
By:_________________________________________
Name:
Title:
<PAGE>
FLEET BUSINESS CREDIT CORPORATION
By:_________________________________________
Name:
Title:
<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By:_________________________________________
Name:
Title:
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By:_________________________________________
Name:
Title:
<PAGE>
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
By:_________________________________________
Name:
Title:
<PAGE>
NATEXIS BANQUE
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
<PAGE>
KZH CRESCENT-3 LLC
By:_________________________________________
Name:
Title:
KZH CRESCENT-2 LLC
By:_________________________________________
Name:
Title:
KZH CRESCENT LLC
By:_________________________________________
Name:
Title:
<PAGE>
UNITED OF OMAHA LIFE INSURANCE COMPANY
By: TCW Asset Management Company,
its Investment Advisor
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
SEQUILS I, LTD.
By: TCW Advisors, Inc.,
as its Collateral Manager
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
<PAGE>
WELLS FARGO BANK, N.A.
By:_________________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.65
PMPA MOTOR FUELS FRANCHISE AGREEMENT
------------------------------------
THIS AGREEMENT is made as of this 23rd day of July, 1999 (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 that certain partnership agreement for Petro
Stopping Centers Holdings, L.P., a Delaware limited partnership.
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 the Base Business Truckstops (as
defined in Section 1.7 herein) and such other Truckstops which are operated
by Petro and approved by Mobil under Section 3.3 ("Petro Branded 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.
Petro Branded Sites and Operator Branded Sites are sometimes collectively
referred to in this Agreement as "Branded Sites". The Base Business
Truckstops approved by Mobil as of the Effective Date for the sale of Mobil
Diesel are listed on Exhibit A attached hereto. The Base Business
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
-1-
<PAGE>
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 and from any other agreement (including the Master
Supply Contract for Resale of Oils and Greases) between Petro and Mobil, or
their respective affiliates.
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.
(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.
-2-
<PAGE>
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. 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 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 non-renew. 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.
-3-
<PAGE>
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 With Regards to Base Business. The term "Base
-------------------------------------------------
Business" as used herein shall refer to all (i) Petro Branded Sites as of
December 31, 1998 and (ii) non-exempt franchise sites as of December 31,
1998. "Exempt franchise sites" shall include all Truckstop locations
existing as of the Effective Date or hereafter opened by any franchisee
which operated a Petro Truckstop prior to February 2, 1997 and all Petro
Operator Branded Truckstops, which at the time of franchising are then a
Mobil branded fuels distributor or dealer.
(a) All Branded Sites approved for the sale of Mobil Diesel are listed on
Exhibit A attached hereto and made a part hereof.
(b) 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 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. 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.
(c) All Branded Sites approved for the sale of Mobil Gasoline are listed
on Exhibit B hereto and made a part hereof.
Notwithstanding the foregoing, Petro and Mobil acknowledge that as of
the Effective Date there are three (3) truckstops included within the
Petro Branded Sites that Mobil has requested be supplied through a
third party Mobil distributor, to wit:
Effingham, Illinois - Tri-Star
Toledo, Ohio - Lenawee Fuels
Beaumont, Texas - Tri-Con
(collectively the "Excluded Petro Gasoline Branded Sites").
Gasoline sold from the Excluded Petro Gasoline Branded Sites shall not
be included in any gallon or volume calculation with respect to or
under this Agreement.
-4-
<PAGE>
1.8 Petro's Obligations to Brand New Sites Mobil Diesel
---------------------------------------------------
Other than with respect to exempt franchise sites, during the Term of this
Agreement, Petro will sell, or will cause its Operators during the Term of
this Agreement 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.
The term "New Sites" as used herein shall refer to all (i) Petro Branded
Sites opened on or after January 1, 1999 and (ii) all non-exempt franchise
sites opened on or after January 1, 1999.
As new sites are branded Diesel, whether Petro Branded Sites or Operator
Branded Sites, such New Sites shall be described on Exhibit A attached
hereto and made a part hereof, and such Exhibit A shall be prepared by
Mobil and updated by Mobil from time to time.
1.9 Petro's Obligations to Brand New Sites Mobil Gasoline. Other than with
-----------------------------------------------------
respect to exempt franchise sites, at all new Petro Truckstop Sites
located in areas listed on Exhibit E at which Mobil desires to sell Mobil
Gasoline, including sites operated by Petro Operators, Petro will sell, or
will cause its Operators during the Term of this Agreement 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.
For all new Petro Branded Sites not located in areas listed on Exhibit E,
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 E 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.
As New Sites Branded Mobil Gasoline are added, whether Petro Branded Sites
or Operator Branded Sites, such new sites shall be set forth on Exhibit B
attached hereto and made a part hereof, and such Exhibit B shall be
prepared by Mobil and updated by Mobil from time to time.
1.10 No Franchise Relationships Between Mobil and Petro Operators
------------------------------------------------------------
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 Motor Fuels 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.
-5-
<PAGE>
1.11 Term of Agreement.
-----------------
(a) The initial term of this Agreement shall be for a fixed period of ten
(10) years, commencing on the Effective Date, unless earlier
terminated as provided herein.
(b) Mobil shall have an option upon expiration of the initial term of this
Agreement, to extend the term hereof for an additional five (5) year
period (the "renewal period"). The renewal period of this Agreement
shall be for the same consideration and under the same terms and
conditions as herein provided and no new agreement need be entered
into. The initial term and the renewal period, if applicable, shall
be referred to herein as the "Term".
(c) Notwithstanding anything to the contrary contained herein, in the
event Mobil exercises the right provided for in Subsection (b) above
to extend the initial term for the renewal period, Mobil shall provide
written notice of such election not less than one hundred eighty (180)
days prior to the expiration of the initial term. In the event Mobil
elects to so extend the Term of the Agreement, Petro shall have the
right to cancel the Agreement at the end of the initial term provided
Petro gives Mobil written notice of such election within sixty (60)
days prior to expiration of the initial term and pays to Mobil on the
last day of the initial term a termination fee, calculated as follows:
(i) Total Reference Volume gallons (as defined in Section 2.3(b))
hereof of Mobil Diesel for calendar year 2009, multiplied by
$.0035 per gallon, multiplied by five (5) years equal gross
amount owed; plus
(ii) Total gallons of Mobil Branded gas purchased by the Petro
Branded Sites during calendar year 2009, multiplied by $.03 per
gallon, multiplied by five (5) years equal gross amount owed.
The aggregate of the gross amounts, discounted at twelve percent (12%),
shall equal the termination fee. Payment of the termination fee shall be
made to Mobil within 15 days of Petro's written cancellation notice to
Mobil.
ARTICLE 2
General Sales Terms
-------------------
2.0 Definitions
-----------
"Permanent Adjustment" means (i) a Temporary Adjustment which occurs for
any one hundred-eighty (180) day period during any two (2) consecutive
years as to any particular Truckstop; or (ii) when Mobil declares it is
making a permanent change to the Reference Volume stated on Exhibit D,
Schedule 2; or (iii) if a decision is made by the Board of Directors of
Petro Stopping Centers, L.P. to divest a location; or (iv) as a result of
an action of eminent domain, a truckstop operations must be permanently
shut down.
-6-
<PAGE>
"Temporary Adjustment" is a reduction in the Reference Volume Mobil due to
(i) Mobil's inability to supply product at a Terminal listed on Exhibit D,
Schedule 2 for a period greater than twenty-four (24) hours; or (ii)
because of a condition of force majeure, Petro is unable to operate the
truckstop fueling facility for a period of greater than twenty-four (24)
hours; or (iii) Petro is unable to acquire product from a Terminal for a
period of greater than twenty-four (24) hours as a result of force majeure.
Petro shall advise Mobil of any said outages in a timely fashion in order
to establish a Temporary Adjustment. For purposes of calculating any
Monthly Temporary Adjustment, the information provided by Petro as to Mobil
Diesel gallons purchased, changes to the Branded Site's monthly allocation
of Current Year Reference Volume and Temporary and/or Permanent Adjustments
shall be accepted and relied upon by both Mobil and Petro, absent Mobil's
evidence to the contrary.
In the event of any debranding due to customer complaints not related to
fuel product quality of a Branded Site, the Current Year Reference Volume
shall be reduced, on a prorated basis, to delete therefrom the Reference
Volume allocated to such debranded Branded Site.
2.1 Terminal Locations, Price, Quantities - Product from Mobil Sources
-------------------------------------------------------------------
(a) First Year Agreement. From the Effective Date and continuing through
the remainder of 1999, the Reference Volume shall be as set forth in
Schedule D, prorated from the Effective Date hereof.
(b) Terminal and Quantity Changes.
(i) Substitution Rights. Petro and Mobil agree that Mobil has the
obligation to provide the volume quantity from the Exhibit D
terminals as set forth on Exhibit D. Mobil has the right, but
not the obligation in the event the contracted volume is not
available at the designated Exhibit D terminal, upon not less
than four (4) hours' prior notice by telephone to Petro, to
substitute another terminal for any of the Exhibit D Terminals,
from which the supply will be available at the same price and
on the same terms and conditions, provided the substituted
terminal does not increase by more than twenty (20) miles round
trip the distance that Petro must haul Mobil Motor Fuel to each
Branded Site served by the affected original Exhibit D
Terminal. Upon and during the period such substitution, such
substituted terminal shall be considered an Exhibit D Terminal
for all purposes and the quantity and price provisions relating
to the affected Exhibit D Terminal will continue to apply to
Mobil Motor Fuels lifted from such substitute terminal.
In the event that Mobil arranges for an alternative or
substitute terminal source, Mobil shall bear all responsibility
and expense for arranging billing and accounting for the sale
and purchase of the Mobil Diesel therefrom, so as not to affect
the delivery of such supply to Petro or the accounting of the
purchase therefore.
In the event that within twenty-four (24) hours, Mobil cannot
find a terminal within twenty (20) miles roundtrip or chooses
not to have a substitute terminal, then Petro is
-7-
<PAGE>
not obligated to take the volume. If Petro does not take the
volume as provided, then it becomes a Temporary Adjustment for
the period.
(ii) 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)(ii) of the Agreement.
(c) Suspension, reduction, deletion of product quantities. Petro may
request a Temporary Adjustment or Permanent Adjustment of product
quantities listed on Exhibit D based on events of force majeure or as
otherwise proved in Section 2.0 herein. In such event the Reference
Volume for that terminal or terminals will be reduced accordingly.
(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 Calendar Year.
(e) If Petro opens a new Petro Branded Site during the Term of this
Agreement that is a full service or pumper 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 "Current Year Adjusted Baseline
Volume" as defined in Section 2.3(b) will be increased by the volume
Mobil agrees to supply up to the estimated yearly gallons ("EYG") as
determined by Petro for such new Petro Branded Site (the "New Site
Diesel Reference Volume"). The New Site Diesel Reference Volume for
each new Petro Branded Site shall represent the volume Mobil agrees to
supply for such new Petro Branded Site for a period of time equal to
the remainder of the calendar year (on a prorated basis) during which
such New Petro Branded Site is opened (after giving effect to a
ninety (90) day grace period following the date of opening).
Commencing with the new Petro Branded Site's first calendar year of
operation, the New Site Diesel Reference Volume shall be included in
calculating the Current Year Adjusted Baseline Volume for purposes of
calculating the annual quantities of Motor Fuels to be supplied for
subsequent years during the Term of this Agreement.
If Mobil does not agree to supply the new Petro Branded Site with any
---
diesel fuel from an Exhibit D Terminal (as amended), no New Site
Diesel Reference Volume will be established for such new Petro Branded
Site and the Current Year Adjusted Baseline Volume will not increase
because of the new Petro Branded Site.
(f) With the exception of all exempted franchised sites, for each new
Operator Branded Site opened during the Term of this Agreement which
Mobil approves for the sale of Mobil Diesel pursuant to Section 3.3
herein, the Current Year Adjusted Baseline Volume will be increased by
the lesser of (x) 3,000,000 gallons or (y) whatever Mobil can supply
after the EYG as determined by Petro for such new Operator Branded
Site, in the manner as provided in subparagraph (e) above. The term
New Site Diesel Reference Volume shall include the Volume herein
contemplated for new Operator Branded Sites.
-8-
<PAGE>
If Mobil does not agree to supply the new Operator Branded Site with
any diesel fuel from an Exhibit D Terminal as amended, no New Site
Diesel Reference Volume will be established for such Operator Branded
Site and the Current Year Adjusted Baseline Volume will not be
increased because of the new Operator Branded Site.
(g) In the event of the merger by Mobil with another company providing
diesel fuel to Petro, the amounts currently being sold to Petro by
such other company (the "Merger Volume") will be included in
calculating the Current Year Adjusted Baseline Volume, provided that
(i) Mobil is able to supply the affected Branded Sites and (ii) a
mutually agreed upon price can be reached.
(h) Upon the addition of each new Branded Site, Mobil shall provide an
amendment to Exhibit D setting forth the designated terminal and the
New Site Diesel Reference Volume, as applicable.
(i) In no event shall the Current Year Adjusted Baseline Volume or
Reference Volume increase following the opening of a new Branded Site
if the price offered to supply such new Branded Site with diesel fuel
is over 1 cent ($0.01) per gallon greater than average of prices
offered from bona-fide suppliers of diesel fuel to Petro from the
terminal that will be the primary source of fuel for the new Branded
Site over the same period of contracted supply.
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 to be executed contemporaneously with the execution of this
Agreement. 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 products 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 changes, if necessary, 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
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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 without Mobil's prior approval, which consent shall not
be unreasonably withheld, conditioned or delayed. Subject to this
Section 2.2(c), Mobil hereby approves Petro selling Mobil Diesel Power
Plus(R). Petro will ensure that all Mobil Diesel 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.
2.3 Quantities.
----------
(a) During the Term of this Agreement, and pursuant and subject to the
terms and conditions of this Agreement, Mobil shall sell to Petro, and
Petro shall purchase from Mobil, 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 at Operator
Branded Sites or except to Petro's retail customers at Petro Branded
Sites without Mobil's prior approval, which consent shall not be
unreasonably withheld, conditioned or delayed. Commencing January,
2000 and continuing thereafter during the Term of this Agreement,
Petro shall purchase from Mobil at least the monthly and annual
Reference Volume of Mobil Diesel as 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). For purposes herein, Calendar Year means a twelve month
period commencing January 1. For the remainder of 1999, from and
after the Effective Date, Petro shall purchase the 1999 Adjusted
Current Year Baseline Volume (as set forth in Exhibit D), prorated for
the portion of the year remaining, on a network wide basis and not on
a terminal or Truckstop location basis. For purposes of calculating
Petro's purchases of Mobil Diesel for 1999, Petro shall be entitled to
include all Motor Diesel purchased during calendar year 1999 under the
terms of that certain PMPA Motor Fuels Franchise Agreement dated
January 30, 1997 (the "Original Agreement"). 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.
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(b) The 1998 Baseline Volume equals 164,897,225 gallons, calculated as
165,884,225, less 987,000 gallons (representing a Permanent Adjustment
for Breezewood, Pennsylvania). For the term of this Agreement, the
annual Reference Volume of Mobil Diesel which Petro shall purchase
will be calculated as follows, to wit:
Current Year Reference Volume (as set forth on Exhibit D, Schedule 2)
Shall be calculated as Current Year Adjusted Baseline Volume
*plus: First Full Calendar Year of New Site Diesel Reference Volume
(as defined in Sections 2.1 (e) and (f))
*plus: First Full Calendar Year Volume of `Merger Sites' (as
defined in Section 2.1 (g)
multiplied by: Annual Growth Factor (as set forth on Exhibit D,
Schedule 2)
*plus: Pro-rated current year Merger Volume of new Branded Sites (as
defined in Sections 2.1(e) and (f))
*plus: Pro-rated current year Volume of `Merger' Sites (as defined
in 2.1(g))
less: Permanent Adjustments (as defined in Definitions section
previously)
less: Temporary Adjustments (as defined in Definitions section
previously)
equals: CURRENT YEAR REFERENCE VOLUME
In the event of a Permanent Adjustment for any Branded Site the Permanent
Adjustment to the Current Year Reference Volume shall be equal to the
affected Branded Site's 1998 Baseline Volume plus the cumulative volume
growth (using growth rates as stipulated in Schedule 2 to Exhibit D) up to
the date of the Permanent Adjustment.
The volume of a Temporary Adjustment to the Current Year Reference Volume
for any Branded Site shall be equal to the pro-rated monthly Reference
Volume (as shown on Schedule 2 to Exhibit D), times the number of days of
the supply outage at the time of the occurrence.
*For new Branded Sites and Merger Volume, include either first full
calendar year or prorated calendar year amounts.
Reference Volume Commitments
----------------------------
Beginning January, 2000 and continuing thereafter during the Term of this
Agreement, Petro shall purchase from Mobil at least the monthly and annual
Reference Volume of Mobil Diesel by terminal, as set forth in Exhibit D,
Schedule 2. Such quantity shall be sourced from Mobil terminals or third
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<PAGE>
party terminals arranged by Mobil, as specified in Exhibit D (the "Exhibit
D Terminals"). For the remainder of 1999, Petro shall purchase from Mobil,
the 1999 Baseline Volume, on a network wide basis, prorated from the
Effective Date until December 31, 1999. For purposes of determining
Petro's total Reference Volume of Mobil Diesel purchased for calendar year
1999, Petro shall be entitled to include all Mobil Diesel purchased under
the terms of the Original Agreement.
(i) Either Petro or Mobil may seek an agreed amendment to Exhibit D
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, for a Calendar Year. If the parties mutually
agree to the requested amendment, the amendment shall take
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)(ii) will be determined in accordance with
the requirements under this 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 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
commitments of diesel on Exhibit D Terminals nor affects
Petro's obligations relating to the Monthly Price Adjustment.
If a party furnishes timely written notice under Section
2.3(c)(ii) 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 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
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<PAGE>
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.
Following the receiving party's receipt of the requested
changes, with proper certification in the case of a 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)(ii) 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)(ii).
If, for any reason, mutual agreement to requested amendment of
Exhibit D as provided in this Section 2.3(c)(ii) 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.
Nothing contained in this Section 2.3(c)(ii) may be construed
as reducing, limiting or otherwise affecting Petro's obligation
to pay to Mobil the Monthly Price Adjustment under Section 2.4.
(d) After determining the Current Year Reference Volume as provided in
Section 2.3, between November 1 and December 31 of each Calendar Year
Mobil and Petro shall agree on monthly and annual schedules reflecting
the forthcoming year negotiated volume which is annual and monthly and
priced by truckstop site and source terminal for Mobil Diesel gallons.
It is expected prior to the meeting that Petro representatives will
provide a fixed monthly estimate for each Branded Site and prior
twelve (12) month competitive pricing data. Once the Current Year
Reference Volume is determined for the forthcoming Calendar Year,
Mobil shall prepare an amended Exhibit D to reflect such terms and
circulate the same to be initialed by Petro and Mobil.
(e) Monthly Price Adjustment-The calculation of the Price Adjustment will
be determined on a calendar month basis throughout the year. Based on
the Current Year Reference Volume outlined on Exhibit D, Schedule 2 a
Monthly Price Adjustment shall not be due from Petro to Mobil if:
---
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<PAGE>
. After giving effect to any Temporary and/or Permanent
Adjustment, at least 90% of such Branded Site's monthly
allocation of the Current Year Reference Volume is purchased.
AND
---
. After giving effect to any Temporary and/or Permanent
Adjustment, in the aggregate, Mobil Diesel gallons equal to
100% of the aggregate Current Year Reference Volume allocated
for such month is purchased.
For a given month, if Petro does not meet both conditions listed
----
above, a Monthly Price Adjustment will be due for each Branded Site as
follows:
. If the Branded Site's actual volume is 100% or more of its
monthly allocation of the Current Year Reference Volume, then
no penalty shall be due,
. If the Branded Site's actual volume is 95% or more of its
monthly allocation of the Current Year Reference Volume, but
less than 100%, then all gallons below the monthly allocation
of the Current Year Reference Volume shall be multiplied by
$0.0025 to calculate the penalty,
. If the Branded Site's actual volume is 90% or more of its
monthly allocation of the Current Year Reference Volume, but
less than 95%, then all gallons below the monthly allocation of
the Current Year Reference Volume shall be multiplied by
$0.0030 to calculate the penalty,
. If the Branded Site's actual volume is less than 90% of its
monthly allocation of the Current Year Reference Volume, then
all gallons below the monthly allocation of the Current Year
Reference Volume shall be multiplied by $0.0035 to calculate
the penalty,
Monthly Price Adjustments will be calculated and applied beginning in
calendar year 2000. For calendar year 1999, a pro-rated annual
calculation (i.e. Reference Volume on a network wide basis between the
Effective Date to December 31, 1999) will be made in lieu of the
Monthly Price Adjustment.
Mobil and Petro shall meet between February 15 and March 15 of each
Calendar Year during the Term of this Agreement (beginning in Calendar
Year 2000) to review Petro's prior Calendar Year purchases of Mobil
Diesel versus the monthly allocation of the Current Year Reference
Volume for such Calendar Year. Payment of any Monthly Price
Adjustments will be due within 30 days of the annual meeting between
Petro and Mobil
2.4 Price. The provisions of Section 2.4 are set forth on Schedule 2 to
-----
Exhibit D
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<PAGE>
2.5 Product Lifting. Ratable Liftings. Petro is expected to lift monthly
----------------
quantities on a daily ratable basis. Daily ratable basis is defined as
lifting reference volumes over a minimum of 85% of the days of any given
month with volumes and days spread equally throughout the month. As an
example, to meet an 85% ratable lifting requirement, Petro must purchase
product at the given supply point a minimum of twenty-six (26) days during
a month that is thirty (30) days long.
Additional examples follow:
Example 1: If reference volume is 225,000 gallons in a month with 30 days,
100 % ratability means lifting 7,500 gallons every day or approximately one
truckload each day.
Example 2: If reference volume is 225,000 gallons in a month with 30 days,
85 % ratability means lifting 7500 gallons (1 load) 22 days of the month
and 15,000 gallons (2 loads) of the month.
In any calendar month, Petro shall not lift more than one hundred ten
percent (110%) of the monthly allocation of Current Year Reference Volume
set forth in Exhibit D from any Exhibit D Terminal (the "Monthly Maximum
Quantity") (after giving effect to all amendments and adjustments thereto),
without Mobil's prior approval. Should Petro lift, without Mobil's prior
approval, more than 110% of the monthly allocation of Current Year
Reference Volume from any Exhibit D Terminal, those incremental gallons
greater than 110% will not be included in the calculation of the monthly
aggregate Reference Volume purchased. 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 without any adjustment to the annual reference
volume. 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 Monthly 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 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 85% of its monthly allocation of Current Year Reference Volume at an
Exhibit D terminal for two (2) consecutive months, Mobil may, at its option
and subject to Section 2.1, 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 supply terminal agreement. Subject
to Section 2.1, such reduction will not reduce or in any way affect Petro's
obligation to pay the Monthly Price Adjustment for such year. Petro agrees
to pay Mobil the Freight Adjustment as indicated on Exhibit D. Both
parties agree to provide reasonable notice of such change.
2.6 Alternate Source Procedures.
---------------------------
The provisions of Section 2.6 are set forth on Schedule 1 to Exhibit D.
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<PAGE>
2.7 Deliveries. Except for Mobil Motor Fuels delivered to sites by Mobil tank
----------
truck or Mobil contract carrier ("Delivered Sites") as shown on Exhibit D,
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 the supply terminal 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 supply terminal 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 the source terminal 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 pay 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 pay the supplier as directed by Petro. Petro shall
exert commercially reasonable efforts to resolve such disputes with the
alternate source supplier within ninety (90) days of receipt of an invoice
and shall indemnify and hold Mobil harmless from and against any losses,
damages, claims, etc. relating to Petro's dispute of an alternate source
supplier's invoice, except as may arise from the breach or negligence of
Mobil or as a result of Mobil providing the incorrect supply price for
billing purposes.
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
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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, so long as
consistent with policies applied to other Mobil PMPA franchisees.
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 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).
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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 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 the parties may mutually agree.
With respect to signage for New Sites, signage advertising Mobil Diesel
shall consist of customary advertising signs to be placed in such
quantities and locations as the parties may mutually agree and as may be
amended from time to time, which signage for Mobil Diesel shall be
designated and supplied by Mobil, installed by Petro, with the expense
therefore to be reimbursed by Mobil within thirty (30) days of receipt of a
demand therefore from Petro. 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 the
signs for Mobil gasoline branding 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,
based upon the Petro Branded Sites geographic location. In any event,
based on current competitive conditions, Mobil shall be subject to a
minimum image incentive offer of 1 cent per gallon for first year EYG for
Mobil Gasoline. 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
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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 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 the image and provide the high standards of
service Mobil expects from locations reselling Mobil Diesel under Mobil
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 provide in its
agreements with Petro Operators that Petro Operators 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 Petro Branded
Sites to substitute, misbrand and/or adulterate product. In the event a
Petro Operator shall knowingly allow product substitution, misbranding
and/or alteration, Mobil shall be entitled to immediately debrand such
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Operator Branded Site. In the event of any debranding of an Operator
Branded Site, the Current Year Reference Volume shall be reduced by the
Reference Volume allocated to such debranded Operator Branded Site, on a
prorated basis. 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. 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 rebranding 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
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respect to the Proprietary Equipment, the costs and expenses relating to
the removal of the Proprietary Equipment and the return of such equipment
to Mobil shall be borne by Petro except as follows:
(a) Mobil shall only pay all debranding expenses, all costs and expenses
relating to the removal of the Proprietary Equipment and the return
thereof to Mobil and all 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) In addition, in the event the termination is occasioned as a result of
3.6(a)(ii) above, with regards to any Mobil gasoline debranding, in
addition to the costs and expenses to be borne by Mobil) as stated
above, Mobil shall also pay to Petro any amounts then due and owing
for the balance of any term for which Petro is eligible for incentive
payments under a Distributor Image Incentive Program or any other
branding imaging program.
(c) Mobil and Petro shall equally bear such costs and expenses related to
the removal and return of Proprietary Equipment to Mobil, including
restoration costs, upon their mutual agreement to terminate this
Agreement.
(d) 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.
(e) In the event of any termination of rights to use trademarks occasioned
by a merger by Mobil with another motor fuels supplier, the terms and
conditions of this Agreement shall be assumed by the surviving entity
of such merger, and any rebranding with regards to Motor Fuels shall
be the sole cost and expense of Mobil or its successor in interest.
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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
----------------------
5.1 Business Operations. Petro agrees to exercise sound business practices 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 established by
Mobil from time to time, provided copies of such standards are provided to
Petro on a timely basis, and Petro is allowed a reasonable period of time
to implement the same. 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; and
(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.
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.
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<PAGE>
ARTICLE 6
Standards of Appearance
-----------------------
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 requirements for which are set forth in
this Article 6 and Mobil's retail and customer-service standards as
provided to Petro from time to time. 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.
6.2 Minimum Appearance Standards.
----------------------------
(a) Petro agrees to operate its Branded Sites in a manner consistent with
a top quality rated truck fueling facility, delivering prompt,
courteous, friendly and efficient service to its customers. Petro
further agrees that to operate its Branded Sites to act in a manner
consistent with promoting the high quality image of the Mobil
trademarks, trade names and service marks.
(b) If at any time during the Term of this Agreement, Mobil determines in
the exercise of its reasonable judgment that any Branded Site operated
by Petro does not meet the minimum appearance standard set forth in
this Section 6.2, Mobil shall provide written notice of such default,
specifying the conditions which need correction, and provide Petro not
less than forty-five (45) days within which to cure or commence
curative action with regards to such condition.
In the event that within such forty-five (45) day period following
receipt of notice specifying the condition to be cured, Petro fails to
cure or commence curative action so as to operate the Branded Site in
compliance with the minimum appearance standard set forth herein, that
Petro shall, at Mobil's option, lose the right to use or display
Mobil's trademarks at such Branded Site.
(c) In maintaining the minimum appearance standards of this Section 6.2,
Petro agrees that at its Branded Sites to:
(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.
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<PAGE>
(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, diesel price sign faces 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. If any such decals or
signage is worn and in need of replacement, Mobil will provide
such replacement decals and signage at its sole cost and
expense, and Petro will thereafter install the same at its cost
and expense.
(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.
(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 one hundred dollars ($100.00)
per year per site unless the parties mutually agree otherwise, as follows:
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(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 an investigation is not taken by Petro or
any Petro Operator within a reasonable time, Mobil shall give Petro thirty
(30) days written notice during which thirty (30) day period Petro shall
commence such investigation, failing which Mobil shall have the right,
exercising its reasonable discretion, after giving ten (10) days' advance
written notice to: withdraw its approval of a Branded Site, and (b) require
all trademark signs and equipment be removed from or covered up at said
Branded Sites as provided in Article 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
ARTICLE 8
Maintenance Obligations
-----------------------
8.1 Maintenance Obligations - Petro. In addition to the minimum standards set
-------------------------------
forth in the Articles 5, 6 and 7, 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.
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<PAGE>
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.
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.
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<PAGE>
(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 limitation, any federal, state and
local requirements for cetane 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 Branded Sites as provided
below. Petro shall arrange for Petro Operator 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 it's own
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 or an authorized third party shall
retain for three (3) years the results of all tests conducted on Mobil
Motor Fuel samples in connection with a customer complaint.
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. The rental, if any
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 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
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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
debranding of a 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 fifty dollars ($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.
(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 or purchased from Mobil in accordance with the terms
of this Agreement. In event Mobil does not wish to repurchase such
proprietary signs and equipment, Petro can dispose of the equipment and
signs. 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
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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-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 forty-five (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 on the same basis as Mobil makes
such POS programs available to other PMPA franchisees. Petro shall execute
Mobil's current POS Maintenance and System Access
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Agreement for Electronic Point of Sale Terminals.
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.
(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.
-30-
<PAGE>
(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, 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, except for claims for billing
disputes or product sensitivity which shall be brought not more than six
(6) months from the date the dispute is alleged to have occurred.
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 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
-31-
<PAGE>
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 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:
(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.
-32-
<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 ninety (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 ninety (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 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.
-33-
<PAGE>
ARTICLE 15
Assignment and Survivorship
---------------------------
15.1 Assignment by Petro. This Agreement may be transferred and assigned by
-------------------
Petro to any purchaser of Petro, subject to the prior written consent of
Mobil, which consent will not be unreasonably withheld or delayed. In the
event Mobil refuses to give its consent within fifteen (15) days of the
request therefore, this Agreement shall be deemed to terminate, subject to
reconciliation between Mobil and Petro of any amounts accrued, due and
payable through the date of such termination, and thereafter this Agreement
shall be deemed to be of no further force and effect. If an assignment by
Petro is approved by Mobil pursuant to this Section 15.1, the assignee must
agree in writing, reasonably satisfactorily 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 hereunder. Any assignee must meet Mobil's
reasonable standards and requirements, including but not limited to credit
and business qualifications. 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
------------------------
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
-34-
<PAGE>
ATTN: Distillate Business ATTN: Sr. V.P. Operations
Manager 6080 Surety Drive
El Paso, Texas 79905
With a copy to:
General Counsel
6080 Surety Drive
El Paso, Texas 79905
and a copy to
Director of Fuel Purchasing and
Transportation
______________________________________
______________________________________
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.
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.
-35-
<PAGE>
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 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
-36-
<PAGE>
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.
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/
- --------------------- By: /s/ KEVIN T. WEIR
Witness ---------------------------------
Name: KEVIN T. WEIR
---------------------------------
Title: Distillate Business Manager
---------------------------------
PETRO STOPPING CENTERS, L.P.
/s/ By: /s/ JAMES A. CARDWELL, Sr.
- --------------------- ---------------------------------
Witness Name: JAMES A. CARDWELL, SR.
---------------------------------
Title: President
---------------------------------
-37-
<PAGE>
EXHIBIT A
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
BETWEEN MOBIL AND PETRO
COMPANY OPERATED SITES AND OPERATOR SITES
APPROVED FOR DIESEL BRANDING
PETRO OPERATED: FRANCHISEE OPERATED:
- --------------- --------------------
El Paso, Texas Claysville, Pennsylvania
Weatherford, Texas Milton, Pennsylvania
Beaumont, Texas Breezewood, Pennsylvania
San Antonio, Texas Monee, Illinois
Eloy/Casa Grande, Arizona
Corning, California
Amarillo, Texas EXCEPTED FRANCHISE SITES:
Shreveport, Louisiana Salena, Kansas
Hammond, Louisiana New Paris, Ohio
West Memphis, Arkansas York, Nebraska
Milan, New Mexico Fargo, North Dakota
Knoxville, Tennessee
Kingman, Arizona
Oklahoma City, Oklahoma
Perrysburg/Toledo, Ohio
Kingdom City, Missouri
Bucksville, Alabama
Girard/Youngstown, Ohio
Effingham, Illinois
Atlanta, Georgia
Laramie, Wyoming
Medford, Oregon
Ocala, Florida
Vinton, Texas
Kingston Springs, Tennessee
Shorter, Alabama
North Little Rock, Arkansas
North Baltimore, Ohio
Wheeler Ridge, California*
*operated by Petro Travel Plaza LLC
-38-
<PAGE>
EXHIBIT B
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
BETWEEN MOBIL AND PETRO
LIST OF TRUCKSTOPS - SITES
APPROVED FOR
GASOLINE BRANDING
PETRO OPERATED: FRANCHISEE OPERATED:
- -------------- --------------------
Eloy, Arizona Monee, Illinois
Kingman, Arizona
Ocala, Florida
Effingham, Illinois
Hammond, Louisiana
Shreveport, Louisiana
Kingdom City, Missouri
Beaumont, Texas
El Paso, Texas
San Antonio, Texas
Milan, New Mexico
North Baltimore Ohio
Toledo, Ohio
Vinton, Texas, Arkansas
Weatherford, Texas, Ohio
Wheeler Ridge, California*
*operated by Petro Travel Plaza LLC
-39-
<PAGE>
EXHIBIT C
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
INTENTIONALLY OMITTED
-40-
<PAGE>
EXHIBIT D
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
TERMINAL LOCATIONS/PRICE/QUANTITIES
-----------------------------------
Petro Stopping Centers D-7
Contract Effective Period 1/1/99-12/31/99
<TABLE>
<CAPTION>
---------------------------------- ---------
Annual Monthly Gasoline
- ------------------------------------------------------------------------------------------------------------------------- ---------
Diesel 110% 110%
Discount 100% 110% 1999 1999
to OPIS 1999 1999 Base Max Gasoline
Terminal Supply Diesel Contract Base Max MG/ MG/ Volume
Truckstop Location ST Location Source OPIS City Average MG/YR MG/YR Month Month (MG/YR)
(+/- CPG)
- ------------------------------------------------------------------------------------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Company Operated
- ------------------------------------------------------------------------------------------------------------------------- --------
WEST MEMPHIS AR Memphis, TN Truman Arnold Memphis -1.05 14,964 16,460 1,247 1,372
- ------------------------------------------------------------------------------------------------------------------------- ---------
NORTH LITTLE ROCK AR Little Rock, AR Truman Arnold Little Rock -1.05 6,288 6,917 524 576
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGMAN (1) AZ Las Vegas, NV Calnev Las Vegas -1.30 15,876 17,464 1,323 1,455
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGMAN (1,2) AZ Las Vegas, NV Calnev 1,181
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGMAN (3) AZ Phoenix Mobil
- ------------------------------------------------------------------------------------------------------------------------- ---------
ELOY AZ Phoenix, AZ Mobil Phoenix -1.80 7,248 7,973 604 664 1235
- ------------------------------------------------------------------------------------------------------------------------- ---------
SHREVEPORT (1) LA Waskom, TX Mobil Shreveport -1.25 12,552 13,807 1,046 1,151
- ------------------------------------------------------------------------------------------------------------------------- ---------
SHREVEPORT (1) LA Waskom, TX Mobil Shreveport 1106
- ------------------------------------------------------------------------------------------------------------------------- ---------
HAMMOND LA Garyville, LA Marathon Baton Rouge -0.75 7,092 7,801 591 650 821
- ------------------------------------------------------------------------------------------------------------------------- --------
NORTH BALTIMORE OH Oregon, OH Marathon Toledo -0.80 8,796 9,676 733 806
- ------------------------------------------------------------------------------------------------------------------------- ---------
NORTH BALTIMORE (1,5) OH Woodhaven. MI Mobil Detroit +.60 742
- ------------------------------------------------------------------------------------------------------------------------- ---------
MILAN NM Albuquerque, NM Navajo Albuquerque -1.60 4,776 5,254 398 438
- ------------------------------------------------------------------------------------------------------------------------- ---------
MILAN (6) NM Ciniza, NM Giant Ciniza -1.00 1036
- ------------------------------------------------------------------------------------------------------------------------- ---------
STONY RIDGE OH Oregon, OH Marathon Toledo -0.80 12,552 13,807 1,046 1,151
- ------------------------------------------------------------------------------------------------------------------------- ---------
STONY RIDGE (4) OH Woodhaven. MI Mobil Detroit
- ------------------------------------------------------------------------------------------------------------------------- ---------
KNOXVILLE TN Knoxville, TN Louis Dreyfus Knoxville -0.80 11,472 12,619 956 1,052
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGSTON SPRINGS(7) TN Nashville, TN Exxon Nashville -0.70 5,928 6,521 494 543
- ------------------------------------------------------------------------------------------------------------------------- ---------
BEAUMONT(4) TX Hebert, TX Mobil Beaumont -0.85 13,380 14,718 1,115 1,227
- ------------------------------------------------------------------------------------------------------------------------- ---------
WEATHERFORD TX Ft. Worth, TX Mobil Dallas/FtWorth -1.10 8,640 9,504 720 792 1106
- ------------------------------------------------------------------------------------------------------------------------- ---------
SAN ANTONIO TX San Antonio, TX Exxon San Antonio -0.65 8,244 9,068 687 756 961
- ------------------------------------------------------------------------------------------------------------------------- ---------
EL PASO TX El Paso, TX Navajo El Paso -3.10 13,356 14,692 1,113 1,224 1166
- ------------------------------------------------------------------------------------------------------------------------- ---------
VINTON TX El Paso, TX Navajo El Paso -3.10 8,568 9,425 714 785 1165
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGDOM CITY (8) MO St Louis Phillips St Louis -1.80 6,223 6,845 519 570
- ------------------------------------------------------------------------------------------------------------------------- ---------
KINGDOM CITY (1) MO St Louis Phillips St Louis 1500
- ------------------------------------------------------------------------------------------------------------------------- ---------
WHEELER RIDGE CA Bakersfield Kern Bakersfield -2.00 2,822 3,104 941 1,035 1800
- ------------------------------------------------------------------------------------------------------------------------- ---------
----------------------------------------------- ---------
TOTALS 168,777 185,654 14,770 16,247 13,819
----------------------------------------------- ---------
FRANCHISE UNITS
- ------------------------------------------------------------------------------------------------------------------------- ---------
MONEE IL LOCKPORT Mobil CHICAGO -1.25 3,540 3,894 295 325 480
- ------------------------------------------------------------------------------------------------------------------------- ---------
------------------------------------------------- ---------
TOTALS 3,540 3,894 295 325 480
------------------------------------------------- ---------
Grand Total 172,317 189,548 15,065 16,572 14,299
------------------------------------------------- ---------
-----------------------------------------------------
1999 Diesel Reference Volume 172,317 MM
-----------------------------------------------------
</TABLE>
-41-
<PAGE>
(1) For delivered locations, actual freight rates will be calculated as a
separate charge and added to the price or billed separately for delivered
locations, at year end a post audit will be done and Petro will be
credited/debited for any changes in freight rates during the year.
Estimated freight rates are listed below:
(2) Mobil will credit Petro .75 cpg (from 3.65 cpg to 2.90 cpg for deliveries
or directly applied to the invoice) for gasoline deliveries made by Winn Oil.
(3) Served through Mobil Full-Line Distributors
(4) Mobil will offer Petro a 1 cpg discount on freight rate for gasoline
delivered from Woodhaven due to the lack of a gasoline additive injection system
available at the primary supply terminal (Oregon, OH) for the North Baltimore
site. The original freight rate estimate of 3.15 cpg less the 1 cpg discount
results in a 2.15 cpg discounted freight rate for gasoline. Effective 11/1/97,
Petro will be invoiced as a separate line item, 2.15 cpg for both diesel and
gasoline delivered from Woodhaven, MI, with the price of the diesel fuel
increased 1 cpg to offset the lower invoiced freight rate. This action will
result in an invoiced diesel price of OPIS plus .0060 cpg.
(-0.004+0.0100=+0.006). Mobil will not offer the 1 cpg image refund as
outlined on page 23 section 3.2 of this contract for this site.
(5) Truckstops lifting small quantities of Diesel Fuel with gasoline for the
gasoline islands will be charged DTP prices if specific OPIS prices are not
listed on the Exhibit D.
(6) Nashville's price is based on current supply logistics into Nashville, TN
market. Any adjustments in pipeline tariffs will be passed on to Petro.
-42-
<PAGE>
SCHEDULE 1 TO
EXHIBIT D
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
1.6(a) During the Term (as defined in Section 1.11 of the Agreement) and
subject to Sections (b), (c), (d), and (e) below, Mobil shall not:
(i) enter into an agreement to supply Mobil Diesel to, or approve any
other Mobil distributor's supply of Mobil Diesel for retail sale
to, any truckstop chain with any dealer to supply Mobil Diesel for
retail sale as a Mobil-branded product at such dealer's retail
outlet if such outlet is a Truckstop and would be, in Mobil's
reasonable judgment exercised at the time of such agreement and
taking into consideration facts known to Mobil at such time, in
substantial competition with Mobil Diesel sales at a Branded Site;
or
(ii) approve any other Mobil distributor's supply of Mobil Diesel for
retail sale as a Mobil-branded product to a retail outlet of such
distributor or of a dealer of such distributor if such distributor
or dealer outlet is a Truckstop and would be, in Mobil's
reasonable judgment exercised at the time of such approval and
taking into consideration facts known to Mobil at such time, in
substantial competition with Mobil Diesel sales at a Branded Site;
or
(iii) enter into an agreement with a truckstop chain (defined as having
at least 10 truckstops in 3 or more states), including any
truckstop chain or the assets thereof that are acquired directly
or indirectly by Mobil or a Mobil affiliate after the Effective
Date of this Agreement as provided in Section 11.1.2 of the Fourth
Amended and Restated Partnership Agreement of Petro, dated as of
the date of this Agreement; or
(iv) enter into an agreement with any dealer to supply Mobil Gasoline
for retail sale as a Mobil-branded product at such dealer's retail
outlet if such outlet would be, in Mobil's reasonable judgement
exercised at the time of such agreement and taking into
consideration facts known to Mobil at such time, in substantial
competition with Mobil Gasoline sales at a Branded Site; or
(v) enter into an agreement to supply Mobil Motor Fuels to, or approve
any other Mobil distributor's supply of Mobil Fuels for retail
sale to, any truckstop chain, in which Petro's reasonable
judgment, has or is likely to develop an image which would be
considered detrimental to the image of Mobil and Petro or their
retail standards; or
(vi) approve any other Mobil distributor's supply of Mobil Gasoline for
retail sale as a Mobil-branded product to a retail outlet of such
distributor or of a dealer of such distributor if such distributor
or dealer outlet would be, in Mobil's reasonable judgement
exercised at the time of such approval and taking into
consideration facts known to Mobil at such time, in substantial
competition with Mobil Gasoline sales at a Branded Site.
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<PAGE>
In determining whether substantial competition exists with respect
to Mobil Diesel sales at Branded Sites for purposes of this
Section 1.6(a), Mobil agrees that substantial competition with
Mobil Diesel sales at a Branded Site would exist if two
Truckstops, each of which is either a "Full Service Travel Center"
or a "Pumper Travel Center" (as those terms are defined below),
both engaged in selling diesel fuel are located within 75 miles of
each other along the same United States interstate highway or
along a highway, major loop, bypass or artery that becomes the
same United States interstate highway. In determining whether
substantial competition exists with respect to Mobil Gasoline
sales, Mobil may apply different criteria to different sites and
locations or give different or no weight to the same or similar
factors with respect to different sites and locations, if such
determination is otherwise reasonable at the time of such
determination. For purposes of this Agreement, "Full Service
Travel Center" is a Truckstop having: separate diesel islands with
a canopy and at least 6 fueling lanes; full service "sit down"
restaurant or "food court"; driver's lounge with separate
telephone area; showers; truck scales; large travel store with
items for sale needed by truckers; and parking for 35 or more 18-
wheelers. For purposes of this Agreement, "Pumper Travel Center"
is a Truckstop having: separate diesel islands with a canopy and
at least 3 fueling lanes; a convenience store; "quick service"
food offering (branded fast food or in-house deli); driver's
telephone area inside the building; and parking for 20 or more 18-
wheelers.
1.6(b) Mobil's obligations under Section 1.6(a)(i) through (v) above apply
only to Branded Sites which either:
(i) are operating and selling Mobil Diesel and/or Mobil Gasoline as
Mobil-branded product(s) under this Agreement; or
(ii) meet the following criteria:
(1) have at any time been approved by Mobil for branding Mobil
Diesel and/or Mobil Gasoline under Section 3.3 of the
Agreement and have been the subject of written notice from
Petro to Mobil given pursuant to Section 16.1 of the
Agreement which notice described the proposed Branded Site
in reasonable detail; and
(2) within six (6) months following such notice, Petro, a real
estate affiliate or Petro's nominee who holds real estate
for Petro's benefit acquires an option to purchase or lease
the site, exercises an option to purchase or lease the site,
purchases the site or enters into a lease of the site for
the operation of a Truckstop with, in the case of a lease, a
lease term of not less than ten (10) years; and
(3) following Petro's, Petro's real estate affiliate or Petro's
nominee as outlined in (2) above lease or purchase of the
site or the acquisition of an option exercisable by
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<PAGE>
Petro to acquire the site, Petro diligently pursues planning
and construction of such Branded Site to completion.
1.6(c) Mobil's obligations under Section 1.6(a) do not apply to the following
retail outlets:
(i) any retail outlet, including Truckstops, which, on or before the
Effective Date, had been subject to an agreement (as may be
extended or renewed as provided for by contract or as required by
applicable law) between Mobil and a dealer or distributor allowing
such dealer or distributor to sell at such retail outlet Mobil
Diesel and/or Mobil Gasoline as Mobil-branded products; or
(ii) any retail outlet, including Truckstops, which, on or before the
Effective Date of this Agreement, had been approved by Mobil for
the retail sale of Mobil Diesel and/or Mobil Gasoline as Mobil-
branded products; or
(iii) any retail outlet which is located outside of the continental
United States; or
(iv) any retail outlet, including Truckstops, which is located a
distance, as measured along roads of general use by trucks in the
over-the-road trucking industry, of more than two (2) miles from
the United States interstate highway network, or more than twenty
(20) miles from the United States interstate highway network in
the case of a retail outlet located on Indian lands, and which is
not located on a highway, major loop, bypass or artery that
becomes part of the United States interstate highway network.
1.6(d) Except as expressly provided in this Schedule I to Exhibit D, Mobil shall
have the right directly or indirectly to market and sell Mobil Motor
Fuels as Mobil-branded products at any retail outlet regardless of such
outlet's proximity to a Branded Site. Nothing contained in this Schedule
I to Exhibit D is to be construed as applying to, prohibiting or limiting
in any respect:
(i) Mobil's right to solicit and directly sell to end-users of motor
fuels including, but not limited to, fleet accounts;
(ii) Mobil's right to sell or supply diesel products for retail sale on
an unbranded basis; or
(iii) Mobil's right to sell or supply products other than diesel or
gasoline motor fuel for retail sale on a branded or unbranded
basis.
1.6(e) Any dispute regarding the application of this Schedule I to Exhibit D is
to be resolved in accordance with Section 16.13 of this Agreement.
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<PAGE>
SCHEDULE 2 TO
EXHIBIT D
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
2.4(a) For Mobil Diesel and Mobil Gasoline sourced from the Exhibit D
Terminals, the price from the Effective Date through December 31, 1999
is as specified in Exhibit D.
For each succeeding Calendar Year, the price will be as provided in
Exhibit D as amended pursuant to Section 2.3.
2.4(b) The prices with respect to Mobil Diesel deliveries at Exhibit D
Terminals (as they may be amended from time to time) are calculated as
follows:
(i) the daily contract average price for low sulfur conventional gross
distillate published by OPIS as the 11:00 a.m. contract price for
the OPIS Reference City specified in Exhibit D (the "Daily OPIS
Contract Average Price"); less
(ii) the OPIS Discount as specified for such Exhibit D Terminal (the
"OPIS Discount")
Such price is effective on the next day (12:00 a.m.) following
publication of the Daily OPIS Contract Average Price through midnight,
inclusive. For weekends and Mobil holidays, the Daily OPIS Contract
Average Price is the last published Daily OPIS Contract Average Price
preceding such weekend or holiday.
2.4(c) If OPIS ceases to publish the Daily OPIS Contract Average Price for the
OPIS reference city specified for a delivery point, the Daily OPIS
Contract Average Price for such delivery point is the daily contract
average rack price of the product at terminals in the area of the
delivery point determined as follows:
(i) a price published by OPIS (specified by Mobil) generally
reflecting daily contract average rack price for the product in
such area.
(ii) if OPIS does not publish a price generally reflecting a daily
contract average price for the product in such area, such other
published price, as Mobil may specify by written notice to Petro,
generally reflecting a daily contract average rack price of the
product in such area.
(iii) if there is no published price generally reflecting a daily
contract average rack price for the product in such area, such
other method, as Mobil may reasonably specify by written notice to
Petro, for determining the daily contract average rack price for
product in such area. Such method may include, but is not limited
to, the average of published daily contract rack prices for such
area.
(iv) In the event that for a period of thirty (30) consecutive days the
Mobil DTP for diesel is lower than the OPIS-based price, then the
parties shall meet to discuss whether the price charged to Petro
shall be either DTP or a negotiated price for the next thirty (30)
day period. After this period, the parties shall re-evaluate in
accordance with this procedure, and Petro will be able to choose
for each thirty (30) day period until the DTP is above the OPIS-
based price.
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<PAGE>
2.4(d) The price for Mobil Gasoline is the Distributor Terminal Price in effect
at the Exhibit D Terminal on the date the product is lifted. The price
for Mobil Gasoline transported to the Delivered Sites, as that term is
defined in Section 2.7, will be increase of Adjustment as mutually
agreed. The Freight Adjustment may change and Mobil agrees to provide
reasonable notice of such change to Petro.
2.4(e) If Mobil substitutes terminals pursuant to Section 2.1 other than those
specified in Exhibit D, the price for the product supplied from such
terminals will continue to be calculated based on the OPIS Reference
City specified in Exhibit D without regard to the location of the
designated terminal.
2.4(f) For diesel product supplied by Mobil from alternate sources, Mobil will
invoice Petro for all diesel product purchased from all alternate
sources in a timely manner and for the same amounts charged by and on
the same terms and conditions of the third-party supplier.
2.4(g) For each Calendar Year during the Term of this Agreement, the annual
Adjusted Base Volume of Mobil Diesel gallons to be purchased by shall
have a Growth Factor as follows, to wit:
1998 Adjusted Baseline Volume = 164,897,225
Calendar Year Adjusted Current Year Growth Factor Volume
------------- Baseline Volume ------------- After Growth
--------------- ------------
Jan. 99 - Dec. 99 164,897,225 4.5% 172,317,600
Jan. 00 - Dec. 00 172,317,600 4.5% 180,071,892
Jan. 01 - Dec. 01 180,071,892 4.2% 187,634,911
Jan. 02 - Dec. 02 187,634,911 4.0% 195,140,308
Jan. 03 - Dec. 03 195,140,308 4.0% 202,945,920
Jan. 04 - Dec. 04 202,945,920 4.0% 211,063,757
Jan. 05 - Dec. 05 211,063,757 4.0% 219,506,307
Jan. 06 - Dec. 06 219,506,307 4.0% 228,286,560
Jan. 07 - Dec. 07 228,286,560 4.0% 237,418,022
Jan. 08 - Dec. 08 237,418,022 4.0% 246,914,742
Jan. 09 - Dec. 09 246,914,742 4.0% 256,791,332
Extension for five (5) years beyond initial term shall utilize a
4% annual growth factor.
* For purposes of calculating Mobil Diesel gallons purchased by
Petro during Calendar Year 1999, Petro shall be entitled to
include Mobil Diesel gallons purchased pursuant to the terms of
the Original Agreement.
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<PAGE>
SCHEDULE 3 TO
EXHIBIT D
TO PMPA MOTOR FUELS FRANCHISE AGREEMENT
For purposes of this Agreement, "alternate source" means any source of diesel
product supplied to Petro through Mobil that is not listed on Exhibit D as an
Exhibit D Terminal and is not a back up source of supply designated by Mobil for
any Exhibit D Terminal. With respect to diesel product supplied from alternate
sources, Petro will propose to Mobil such alternate source of diesel supply
including the name of the supplier, location, quantity, specifications and
price. If the alternate source product meets or exceeds minimum industry
specifications for diesel fuel and the alternate source procedures, Mobil will
approve such alternate source. If Mobil approves such alternate source, Petro
will make arrangements to lift the approved product and Mobil will pay 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. Petro shall exert commercially reasonable efforts to resolve such
disputes with the alternate source supplier, unless resulting from Mobil's
error, and shall indemnify and hold Mobil harmless from and against any losses,
damages, claims, etc. relating to Petro's dispute of an alternate source
supplier's invoice. If Mobil does not approve such alternate source for the
permissible reasons described herein, Petro shall seek a different alternate
source of diesel supply reasonably acceptable to Mobil. If the alternate source
product meets minimum industry diesel specifications and the supplier agrees to
the alternate source procedures described in this Agreement, Mobil shall approve
the alternate source.
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<PAGE>
EXHIBIT E
GASOLINE MARKETING STATES AS OF EFFECTIVE DATE
----------------------------------------------
Arizona
So California To Bakersfield
Connecticut
Delaware
Florida
Illinois
N.W. Indiana
Louisiana
Maine
Massachusetts
Michigan
Minnesota
E. Missouri
New Hampshire
New Jersey
New York
North Carolina
N.W. Ohio
Pennsylvania
Rhode Island
Texas (The counties East of Kerr County and Northeast of Guadalupe County plus
Nueces Counties)
Vermont
Virginia
Wisconsin
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<PAGE>
EXHIBIT 10.66
MASTER SUPPLY CONTRACT
FOR
RESALE OF OILS AND GREASES
THIS SUPPLY CONTRACT is made as of July 23, 1999 (the "Effective Date"),
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.
--------------------
(a) Seller agrees to sell and Buyer agrees to purchase, on the terms and
conditions of this Supply Contract, Seller's 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 Buyer
Operated Truckstop Locations to its Truckstop chain (each, a "New
Location"), Exhibit 1 will be modified to include them. "Buyer
---------
operated" locations includes locations operated by an affiliate of
Buyer and branded Petro. For purposes herein "Seller's lubricants"
shall be those set forth on Exhibit 2, as may be amended from time to
time.
Buyer agrees to purchase the Minimum Purchase Gallons of Seller's
lubricants set forth below, as adjusted from time to time pursuant to
paragraphs (b), (c) and (d) below:
The 1998 Baseline Lubricant Volume is 1,100,000 gallons
Gallons per year of
Calendar Year Growth Factor Mobil Lubricants
---------------------------------------------------------------
1999 8.01% 1,190,000
--------------------------------------------------------------
2000 12.9% 1,344,000
--------------------------------------------------------------
2001 3.8% 1,395,000
--------------------------------------------------------------
2002 4.3% 1,455,000
--------------------------------------------------------------
2003 4.1% 1,515,000
--------------------------------------------------------------
2004 4.2% 1,580,000
--------------------------------------------------------------
2005 3.7% 1,640,000
--------------------------------------------------------------
2006 4.0% 1,705,000
--------------------------------------------------------------
2007 4.0% 1,777,000
--------------------------------------------------------------
2008 4.0% 1,848,000
--------------------------------------------------------------
2009 4.0% 1,921,920
--------------------------------------------------------------
--------------------------------------------------------------
<PAGE>
If, however, the price to Buyer from Seller for any consecutive sixty
(60) day period in a calendar year is equal to or greater than the
higher of (i) the price of Shell Rotella T plus ten (10) cents a
gallon and (ii) the price of Chevron Delo plus ten (10) cents a
gallon, the growth factor for the following calendar year(s) shall be
eliminated until such time as Sellers price to Buyer is less than or
equal to the higher of the above-described Shell and Chevron prices
plus ten (10) cents, at which time the growth factor for the remaining
calendar years will be resumed.
For years 1999 and 2009, the Minimum Purchase Gallons shall be pro-
rated, based on the actual number of days of the Initial Term (as
defined below) that fall within that calendar year.
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 "Seller's lubricants" are used
interchangeably.
(b) The volumes referenced above shall be adjusted calculated as follows:
Prior Year Adjusted Base Volume (as calculated below) (for 1999, the
prior year adjusted volume will be 1,100,000 gallons)
plus: 30,000 gallons for each New Location that had opened in the
previous calendar year
equals: Base Volume
times: Annual Growth Factor (noted above)
equals: Adjusted Base Volume
less: Permanent Adjustments (as defined below)
less: Temporary Adjustments (as defined below)
equals: MINIMUM PURCHASE GALLONS
(c) A list of Seller's lubricants that may be purchased by Buyer is set
forth on Exhibit 2, attached to and made part of this Supply Contract.
---------
Seller's 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
2
<PAGE>
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. If Seller deletes without
replacing a product listed on Exhibit 2, Buyer's purchase obligations
shall be adjusted pursuant to Section (c)below.
(d) A "Permanent Adjustment" or a "Temporary Adjustment" is a
reduction in the Minimum Purchase Gallons due to one or more of
the events listed below.
Permanent Adjustment: Upon the occurrence of any of the following
--------------------
events, the Minimum Purchase Gallons shall be permanently reduced
by the Effected Volume (as defined below): (i) if a decision is
made by the Board of Directors of Petro Stopping Centers, L.P. to
divest a Truckstop Location; (ii) as a result of an action of
eminent domain, a Truckstop Location's operations must be
permanently shut down; or (iii) Mobil discontinues, without
replacing with a comparable product, any Product listed on
Exhibit 2 (a "Product Discontinuation").
---------
Temporary Adjustment: Upon the occurrence of any of the following
--------------------
events, the Minimum Purchase Gallons shall be temporarily reduced
by the Effected Volume: (i) Mobil's inability to supply product
at a Truckstop location for a period greater than 30 days; or
(ii) because of a Force Majeure Condition (as defined in Section
10 below), Petro is unable to operate the Truckstop facility for
a period of greater than twenty-four (24) hours. Petro shall
advise Mobil of any said outages in a timely fashion in order to
establish a Temporary Adjustment.
Effected Volume: The "Effected Volume" will be calculated as
---------------
30,000 gallons (plus the cumulative volume growth using the
growth factors applied pursuant to Section 1(a) up to the date
of the Permanent Adjustment) for each Truckstop Location affected
by one or more of the above-described events, prorated over the
period of time that the event is in effect for that Truckstop
Location, except that if the only such event for a Truckstop
Location is a Product Discontinuation, then the Effected Volume
will equal the average annual volume of that product that Buyer
purchased from Seller during the three (3) years preceding such
Product Discontinuation, prorated over the period of time that
the Product is Discontinued.
2. Marketing Obligations. During the term of this Supply Contract, Buyer
---------------------
agrees:
3
<PAGE>
(i) to offer Mobil Delvac 1300 Super at all Truckstop Locations operated
by Buyer;
(ii) not to allow any advertising or promotional materials of competitive
brands of engine oil outside or inside any of its facilities,
including the fuel islands. However, Buyer may display non-
promotional signs (that is, purely informational, stating the pricing
of products or services) 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 or a
similar 3rd party advertising company;
(iii) to 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;
(iv) to discontinue (subject to and in accordance with Buyer's current
contractual obligations) the sale of private label lubes at Buyer's
Truckstop Locations to the extent that replacement of Buyer's private
label products with Seller's brand oils and greases is economically
attractive for Buyer under commercial terms to be mutually acceptable
to Buyer and Seller; and
(v) to use its commercially reasonable efforts to ensure that it
increases its sales of Seller's lubricants. These efforts will
include but not be limited to the following:
a. Buyer shall display 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) and (local permit withstanding) two Mobil
Delvac exterior snaplock signs between the lube bay entrance
doors promoting Delvac products, programs and/or promotions.
Buyer shall not display any competitive product signage on the
exterior of any Truckstop Location.
b. Buyer shall display at least two (2) Mobil Delvac snaplock signs
(or other Mobil product data signs) and one (1) bay banner,
provided at Seller's sole cost, inside the garage of each
Truckstop Location.
c. Buyer shall display a Mobil Delvac snaplock sign, counter mats,
counter top display, applicable promotional floor displays, and
Delvac Accutrack signage, provided at Seller's sole cost, inside
the
4
<PAGE>
garage waiting area of each Truckstop Location. Buyer shall not
display any competitive product signage on the inside of any
Truckstop Location garage waiting area.
d. Buyer shall participate in the Mobil Delvac Accutrack Oil
Analysis Program and carry the related kits and display signage,
POP materials and program details at all lube bay locations at
each Truckstop Location, all of which (excluding the kits) will
be provided at Seller's sole cost.
e. Buyer shall participate in the Mobil Delvac Extended Life Oil
Filter Program and carry the related filters and display the
related signage, POP materials and program details at all lube
bay locations at each Truckstop Location, all of which (excluding
the filters) will be provided at Seller's sole cost.
f. Subject to existing uniform supply company agreements, Buyer
shall ensure 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.
g. Buyer shall participate in all promotions offered by Seller where
commercially reasonable and shall not display promotions of
competitive oil suppliers.
h. Buyer shall not participate 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 and provides Buyer with the program and promotion plan prior
to the beginning of the calendar year in which the program is
offered.
i. Buyer shall use commercially reasonable efforts to encourage
existing and future franchisees to purchase, promote and sell
Seller's lubricants as set forth herein.
Buyer and Seller agree to actively promote Mobil Delvac 1300 Super and
other of Seller's lubricants during the term of this Supply Contract,
including participation in jointly developed and national CEO promotions.
If Buyer'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 Buyer's ability to advertise or
promote competitive brands of engine oil, Seller agrees to meet with Buyer
to discuss this limitation on advertising and promotions of
5
<PAGE>
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.
3. Term. The term of this Supply Contract is for an initial term of ten (10)
-----
years, beginning on the Effective Date and ending on tenth anniversary of
the Effective Date (the "Initial Term"). In addition, Seller may, at its
option, extend the term of this Supply Contract for an additional period of
five (5) years (the "Extended Term"). The Minimum Purchase Gallons for each
calendar year of the Extended Term shall be equal to the Minimum Purchase
Gallons for year 2009 as calculated in Section 1.(b). For years 2009 and
2014, the Minimum Purchase Gallons shall be prorated, based on the actual
number of days of the Extended Term that fall within that calendar year.
Upon the exercise of this option, said extension shall be for the same
consideration and under the same terms and conditions as herein provided,
and no new agreement need be entered into. Seller may exercise this option
with or without exercising its option to extend that certain PMPA Motor
Fuels Franchise Agreement of even date herewith. Seller may exercise its
right to extend the term of this Supply Contract by giving Buyer written
notice of such election not less than 180 days prior to the expiration of
the Initial Term. In the event Seller elects to so extend the term of this
Supply Contract, Buyer shall have the right to cancel this Supply Contract
at the end of the Initial Term by giving Seller written notice of such
election not less than sixty (60) days prior to expiration of the Initial
Term and paying to Seller on the last day of the Initial Term a termination
fee calculated as follows (the "Termination Fee"): The present value of the
anticipated income stream from the Minimum Purchase Gallons that would have
been required for the five years of the Extended Term at One Dollar ($1.00)
per gallon, discounted at 12%, based on a five (5) year stream received in
arrears. For purposes of calculating the Termination Fee, the Annual
Prospective Gallons equals the Minimum Purchase Gallons for year 2009 as
calculated in Section 1.(b).
4. 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
Seller's products purchased by individual Truckstop Locations to Buyer
for payment within 30 days.
6
<PAGE>
(c) Deliveries. Deliveries of Seller's 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 Seller's products is 6,000
gallons; minimum order quantity for packaged Seller's lubricants
(drums and pails) is 110 gallons; minimum order quantity for tankwagon
delivery is 250 gallons. Deliveries made below minimums are subject to
a small order premium. Buyer will dedicate bulk storage facilities to
accommodate 6,000 gallon tank loads of Mobil Delvac 1300 Super.
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. However, Seller agrees that it will not increase
the price of any product during the first year of this Supply Contract
unless, and to the extent, that Seller's costs of additives,
transportation, base oils, crude, and/or packaging components increase
("Cost Increases"). After the first year of this Supply Contract,
price increases, if any, shall be reasonably consistent with prices
charged by nationally recognized competitors, provided that Seller
shall always have the right to increase prices to cover any Cost
Increases. In no event, however, shall the price to Buyer be greater
than that charged by Seller to other customers in similar classes of
trade.
5. 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.
---------
7
<PAGE>
6. Trademarks; Trade Dress; Brand Names; Advertising. Buyer shall use
--------------------------------------------------
Seller's trademarks, trade dress, and brand names (as the same may be
modified by Seller from time-to-time, in its sole discretion, "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 Seller's 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 Seller's 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 Section 6
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 Section 6. Buyer agrees to pay Seller's reasonable
attorney fees if Seller institutes legal action to enforce any provisions
of this Section 6 and prevails in such legal action.
7. 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 Section 7, 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.
8. 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 Supply Contract: 1) meet applicable API standards and 2) will
meet future applicable API standards.
8
<PAGE>
9. 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.
10. Contingencies.
--------------
(a) Seller shall not be liable for loss, damage, or demurrage due to any
delay or failure to perform:
(i) because of compliance with any action, order, direction, request,
or control of any governmental authority; or
(ii) as a result of any disruption in the production, manufacture,
storage, transportation, distribution, or delivery of Seller's
lubricants, or the unavailability or inadequacy of supply of
Seller's lubricants, 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 the reasonable control of the obligated party when acting
in good faith and in the ordinary course of business, whether or
not similar to any of the foregoing (each, a "Force Majeure
Condition").
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
9
<PAGE>
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 Section 10, 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 Section 10, the decision or determination shall be
made in Seller's sole and absolute discretion acting in the ordinary
course of business.
(b) Buyer shall not be liable for loss, damage or demurrage due to any
delay or failure to perform as a result of any Force Majeure
Condition, provided that in no event will an inability to pay amounts
due be deemed a result of a Force Majeure Condition.
11. Indemnity.
---------
(a) 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.
(b) 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
10
<PAGE>
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 Supply Contract.
(c) The provisions of Sections 9 and 11 survive any termination or
nonrenewal of this Supply Contract, however arising.
12. 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.
13. 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
13(c) 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 any affiliate of Buyer fails to comply with the
provisions of Section 6 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
11
<PAGE>
Supply Contract in contravention of the terms of Section 22.
(c) 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.
14. Buyer's Right to Terminate. 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.
15. Damages.
-------
(a) Buyer acknowledges that Seller is relying on sales to Buyer of the
Minimum Purchase Gallons set forth in this Supply Contract. If, prior
to the expiration or earlier termination of this Supply Contract,
there is a change in the ownership of Seller or of Petro Stopping
Centers Holdings, L.P. such that the persons (including entities) that
are partners as of the Effective Date of either of those entities
cease to own a majority of the equity interests of Seller or Petro
Stopping Centers Holdings, L.P., respectively (a "Change in
Ownership"), the following liquidated damages shall apply. If,
subsequent to a Change in Ownership, a Material Default occurs under
Section 2 of this Supply Contract, Seller shall give Buyer written
notice of such Material Default and thirty (30) days to cure such
Material Default; provided however, that if the Material Default
occurs within the first ninety (90) days after the date of the Change
in Ownership, the 30-day cure period shall not commence until the 90th
day following the date of the Change in Ownership. If Buyer fails to
cure all defaults under Section 2 by the end of such 30-day cure
period, Seller may terminate this Supply Contract, and Buyer shall pay
Seller as liquidated damages $1.00 per gallon, multiplied by the
amount by which the Total Minimum Purchase Gallons exceeds the number
of gallons of Mobil lubricants actually purchased by Buyer prior to
the termination of this Supply Contract.
12
<PAGE>
(b) For purposes of this Section 15:
(i) "Total Minimum Purchase Gallons" means: (A) at any time prior to
Seller's exercise of its right to extend the term of this Supply
Contract (or if Seller has exercised that right but Buyer has
exercised its cancellation rights under Section 3 of this Supply
Contract): 17,370,920 gallons plus any gallon requirements added
for New Locations and less any Permanent Adjustments pursuant to
Section 1; and (B) at any time after Seller's exercise of its
right to extend the term of this Supply Contract (and Buyer has
not exercised its cancellation rights under Section 3):
26,980,520 gallons plus any gallon requirements added for New
Locations and less any Permanent Adjustments pursuant to Section
1.
(ii) A Change in Ownership shall be determined by including all
ownership changes from the Effective Date of this Supply
Contract on a cumulative basis, and a change in ownership shall
include any change in the power to vote the ownership interests
and shall include any veto power.
(iii) "Material Default" means Buyer's failure to comply with any one
or more of the requirements under Section 2 of this Supply
Contract, whether such failure is one of commission or omission,
on five (5) or more occasions during any twelve (12) month
period. Each day that such failure occurs shall be considered a
new and separate failure.
(c) The damages here liquidated are confined to losses resulting from a
Material Default subsequent to a Change in Ownership as described in
this Section 15, and shall not affect any other rights or remedies
that Seller may have under this Supply Contract (including without
limitation Seller's damages for any other breach of this Supply
Contract, Seller's rights to payment for products purchased or
Seller's rights and remedies under Section 13) or under applicable
law. If Buyer defaults in the payment of any amounts due pursuant to
this Section 15, or if Seller brings any action for breach of this
Supply Contract and is awarded any amount as a result, Buyer shall pay
all costs and reasonable attorneys' fees associated with collection of
such amounts.
16. 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 Seller's
lubricants. Buyer acknowledges that its conduct impacts Seller's products,
Trademarks, and other Seller's retailers,
13
<PAGE>
distributors, and dealers; therefore, Buyer agrees to conduct its business
in a manner that maintains and enhances public acceptance of Seller's
lubricants, Trademarks, and Seller's 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 Seller's lubricants
inside of Buyer's Truckstop Locations.
17. 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.
18. Notices. All notices under this Supply Contract, except those under
-------
Section 6, 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 three (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
Address for Buyer: Petro Stopping Centers, L.P.
6080 Surety Drive
El Paso, Texas 79905
Attn: General Counsel and
Attn: Sr. V. P. - Operations
19. 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.
14
<PAGE>
20. 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.
21. 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 Seller's 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.
22. 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.
23. Governing Law. This Supply Contract shall be construed and enforced in
-------------
accordance with the laws of Delaware, without regard to its principles of
conflicts of laws. Where federal jurisdiction exists over any action, suit
or proceeding arising out of this Supply Contract, the parties designate
the United States District Court for the District of Delaware for the
exclusive resolution of that dispute, and submit to the jurisdiction of
that court. If federal jurisdiction does not exist over that dispute, the
parties designate the Delaware State Courts for the exclusive resolution of
that dispute and submit to the jurisdiction of that court.
EXECUTED as of the date first above written.
WITNESSES: MOBIL OIL CORPORATION
______________________ /s/ KEVIN T. WEIR
--------------------------------
By: Kevin T. Weir
-----------------------------
Its: Distillate Business Manager
----------------------------
15
<PAGE>
WITNESSES: PETRO STOPPING CENTERS, L.P.
______________________ /s/ JAMES A. CARDWELL, SR.
-----------------------------
By: James A. Cardwell, Sr.
--------------------------
Its: President
-------------------------
16
<PAGE>
Exhibit 1
List of Locations
El Paso, Texas
Weatherford, Texas
Beaumont, Texas
San Antonio, Texas
Eloy/Casa Grande, Arizona
Corning, California
Amarillo, Texas
Shreveport, Louisiana
Hammond, Louisiana
West Memphis, Arkansas
Milan, New Mexico
Knoxville, Tennessee
Kingman, Arizona
Oklahoma City, Oklahoma
Perrysburg/Toledo, Ohio
Kingdom City, Missouri
Bucksville, Alabama
Girard/Youngstown, Ohio
Effingham, Illinois
Atlanta, Georgia
Laramie, Wyoming
Medford, Oregon
Ocala, Florida
Vinton, Texas
Kingston Springs, Tennessee
Shorter, Alabama
North Baltimore, Ohio
North Little Rock, Arkansas
Wheeler Ridge, California/1/
/1/Operated by Petro Travel Plaza LLC, an affiliate of Buyer.
17
<PAGE>
Exhibit 2
Products and Initial Prices
5/10/99
PETRO P.S.C.
<TABLE>
<CAPTION>
MAT'L-DESC. SCALE PRICE/$$ UNIT
<S> <C> <C> <C>
986139 - LUBE HD 85W-140,2500LB. 0.5500 LB
988738 - DELVAC 1300 SUP 15W-40,BULK. From....... 1-999 3.0900 NG
1000-5999 3.0400 NG
6000 2.9400 NG
98064P - LUBE SHC 75W-90,375LB. 1.6000 LB
98070P - MOBIL 1 SYN GREASE,10X12 OZ. 2.6750 EA
98078D - LUBE HD 85W-140,120LB. 0.6750 LB
98087D - MOBIL 1 FORMULA 15W-50,6X1QT 14.8500 NG
98095J - MOBIL 1 SYNTHETIC ATF,6X1QT. 14.2600 NG
98120D - DELVAC 1300 SUP 15W-40,55GA. 3.4600 NG
98154P - TRANS SHC 50,105LB. 1.7300 LB
98177Q - MOBIL 1 SYNTHETIC GREASE,10X 2.6750 EA
98220D - MOTOR OIL 10W-30,55GA. 4.1900 NG
98242A - DELVAC 1,4X1GA. 13.4800 NG
98264P - LUBE SHC 80W-140,375LB. 1.6000 LB
98301P - GREASE HTM,3000LB. 0.5060 LB
98399N - MOBIL 1 FORMULA 5W-30,6X1QT. 14.8500 NG
98447N - LUBE HD 85W-140,12X1QT. 0.8067 LB
98456D - DELVAC 1300 SUP 15W-40,4X1GA 4.6200 NG
98456N - LUBE HD 80W-90,12X1QT. 0.8067 LB
98499E - MOTOR OIL 5W-30,12X1QT. 3.9800 NG
98512D - DELVAC 1230,4X1GA. 4.3400 NG
98544G - MOBIL 1 FORMULA 10W-30,6X1QT 14.8500 NG
98601P - LUBE SHC 75W-90,105LB. 1.6800 LB
98639N - TRANS HD 50,16GA. 4.2800 NG
98685P - TRANS SHC 50,375LB. 1.6500 LB
98754J - GREASE HTS,400LB. 0.7325 LB
98761P - LUBE SHC 80W-140,105LB. 1.6800 LB
98795D - GREASE HP,60X14.5OZ. 0.8635 EA
98898D - LUBE SHC 80W-140,38LB. 1.7750 LB
98927D - DELVAC 1240,4X1GA. 4.3400 NG
98E038 - GREASE HP,400LB. 0.7250 LB
98E092 - LUBE HD 80W-90,400LB. 0.5950 LB
98E143 - MOTOR OIL 10W-30,12X1QT. 3.9800 NG
98E220 - MOTOR OIL 20W-50,12X1QT. 4.8100 NG
98E300 - LUBE HD 85W-140,400LB. 0.5950 LB
98E322 - MOBIL 1 FORMULA 15W-50,55GA. 14.1300 NG
98E325 - DELVAC 1,55GA. 12.8800 NG
98E340 - MOTOR OIL 10W-40,12X1QT. 3.9800 NG
98E345 - MULTIPURPOSE ATF,12X1QT. 3.8000 NG
98E467 - HEAVY DUTY 30,12X1QT. 4.1100 NG
98E880 - LUBE HD 85W-140,BULK. 0.5150 LB
98E967 - DELVAC 1300 SUP 15W-40,12X1Q 4.7100 NG
98K378 - GREASE HP,10X14 OZ. 0.8635 EA
98K791 - TRANS HD 50,55GA. 3.8900 NG
98W573 - MOBIL 1 SYN GEAR LUBE,12X1QT 2.1750 LB
</TABLE>
18
<PAGE>
EXHIBIT 10.67
[LOGO] [LETTERHEAD OF PETRO STOPPING CENTERS APPEARS HERE]
Press Release
Contact: Curtis Coats, III FOR IMMEDIATE RELEASE
Phone: (915) 774-7335
[email protected]
VOLVO TRUCKS ACQUIRES AN INTEREST IN PETRO STOPPING CENTERS
El Paso, Texas - Petro Stopping Centers, L.P. (Petro) announced today that
Volvo Trucks North America, Inc has acquired an ownership interest in the
company. The transaction makes Volvo Petro's second largest equity holder.
The investment by Volvo, along with an additional investment by Mobil Long
Haul, Inc., an affiliate of Mobil Oil Corporation and Petro's recently completed
refinancing will allow Petro to pursue its growth objectives to expand services
and locations. Currently, Petro and its franchisees own and operate 51 travel
plazas in 29 states.
Jack Cardwell, chairman of the board and CEO of Petro, commented that the
agreement with Volvo brings together three strong brands for the benefit of all
Petro customers. "Our customers benefit from our partnership with Mobil by
making available high quality
<PAGE>
lubricants and fuels," he said. "With Volvo Trucks' partnership, we align
ourselves with a company focused strongly on quality and service. Customers will
see enhancements through our facilities, in terms of improved maintenance
services, new business offerings and improved driver amenities."
"Volvo and Petro will establish a new standard of driver services for
travel plazas," said Marc F. Gustafson, president and CEO of Volvo Trucks. "We
are moving ahead to ensure Petro Stopping Centers remains the preferred choice
of professional drivers who want a high level of products and services, in a
safe, clean and friendly environment."
The agreement immediately expands Volvo's ability to provide customers with
additional maintenance services on a 24-hour a day, seven-day-a-week-basis. More
than 225 Petro: Lube service bays will provide preventive maintenance services
and minor repairs. Petro: Lube was the innovator in the express truck-
maintenance industry and to date has performed over two million oil changes.
Petro: Lube facilities will complement Volvo's existing network of 208
full-service dealer facilities, and immediately become preferred vendors for
Volvo Action Service, Volvo Trucks' around-the-clock customer support center.
Truck drivers can call 1-800-52 VOLVO to receive on-the-road assistance,
including repair and maintenance services. Volvo and Petro also have plans to
expand Petro: Lube facilities at ten existing Petro locations.
<PAGE>
Volvo Trucks North America, Inc. (www.volvotrucks.com) manufactures
-------------------
commercial trucks and tractors. The company leads the heavy-truck industry in
the areas of safety research and development, quality manufacturing processes
and environmental care. Volvo Trucks also markets heavy-duty diesel engines and
rear suspensions. Headquartered in Greensboro, N.C., Volvo Trucks is an
affiliate of Volvo Truck Corporation, Gothenburg, Sweden.
Petro Stopping Centers was founded in 1975 and is headquartered in El Paso,
Texas. Petro Stopping Centers are one stop, multi-service facilities featuring
separate diesel and gasoline fueling facilities, Iron Skillet restaurants,
travel and convenience stores and Petro: Lube preventive maintenance centers.
For more information on Petro visit the company's website at
www.petrotruckstops.com.
- -----------------------
<PAGE>
[LOGO APPEARS HERE] 6080 Surety Drive
El Paso, TX 79905
Phone 915 779-4711
Fax 915 774-7391
EXHIBIT 10.68
Press Release
Contact: Curtis Coats, III FOR IMMEDIATE RELEASE
Phone: (915) 774-7335
VOLVO TRUCKS TO ACQUIRE STAKE IN PETRO STOPPING CENTERS
El Paso, Texas - Petro Stopping Centers, L.P. announced today that Volvo
Trucks North America has agreed in principle to acquire an interest in the
company. Details of the strategic alliance which bring together Volvo Trucks,
the industry's top rated maker of on-highway tractors and Petro, the top rated
travel plaza chain, were not announced.
"By joining with Petro, Volvo is aligning the highest quality trucks on the
road with the travel plaza operator rated best by drivers and owner-operators,"
said Marc F. Gustafson, president and CEO of Volvo Trucks North America.
"Through our joint efforts, we will significantly improve the business
operations and lifestyles of truckers."
In a recent study by MarketRuler Corporation for the TruckStop Plaza
newsletter, drivers and owner-operators rated Petro the most preferred full-
service travel plaza network. Similarly, a 1998 study conducted by Louis Harris
& Associates revealed that the
<PAGE>
Volvo VN Series was the most preferred new truck introduced since 1996.
According to Jack Cardwell, Chairman of the Board and CEO of Petro, this will
be an ideal partnership. "Petro is already aligned with Mobil Corporation and
has benefited from the association with their quality products and services,"
said Cardwell. "The addition of another quality partner such as Volvo, is an
outstanding fit for Petro and its extensive customer base."
The Volvo Trucks-Petro partnership will immediately enhance Volvo's ability
to provide quality maintenance services to its customers on a 24-hour a day,
seven-day-a-week basis. Volvo owners will gain access to 214 Petro:Lube service
bays operated at 50 Petro locations, complementing Volvo's existing network of
208 full-service dealer facilities. Petro: Lube was the innovator in the express
truck maintenance industry and to date has performed over two million oil
changes.
Petro's service facilities will be tied to Volvo customers through Volvo
Action Service an around-the-clock customer support center staffed by Volvo
employees.
The Volvo Trucks-Petro alliance will also leverage the sales activities of
the truck maker's dealer network through enhanced recognition of the Volvo
brand. It will offer Volvo truck dealers the opportunity to establish satellite
"showrooms" at certain Petro
<PAGE>
locations for truck sales and specialized maintenance and repair services.
In connection with the transaction, Volvo will partner with Mobil Oil in the
Mobil Delvac Dream Lease Sweepstakes. The contest, which awards a two-year,
unlimited mileage lease, begins May 2, 1999 and is open to CDL holders in the
U.S. and Canada, 18 years or older. The grand prize is a Volvo 770.
As part of the transaction, it is contemplated that Petro's existing majority
partner's interest in Petro will be repurchased. Closing of the transaction is
subject to Volvo satisfaction with its due diligence, negotiation of definitive
agreements, obtaining additional financing, obtaining bank facility amendments,
obtaining amendments to the Senior Notes Indenture (and a to be determined
minimum percentage of the Senior Notes holders waiving the change of control
provisions of the indenture), and receipt of regulatory approvals, among other
matters. Closing of the transaction is anticipated in June 1999.
Volvo Trucks North America, Inc. manufactures commercial trucks and tractors,
including the VN Series, Autocar and Xpeditor. They lead the heavy-truck
industry in the areas of safety research and development, quality manufacturing
processes and environmental care. Headquartered in Greensboro, N.C., Volvo
Trucks is an affiliate of Volvo Trucks Corporation, Gothenburg, Sweden.
<PAGE>
Petro has 51 locations in 29 states. Petro Stopping Centers are one stop,
multi-service facilities featuring separate diesel and gasoline fueling
facilities, Iron Skillet restaurants, travel and convenience stores and Petro:
Lube preventive maintenance centers.
